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Shares of Strategy (MSTR) fell 17% on Thursday and took another 1% hit in after-hours trading following the release of fourth-quarter earnings.
The software company, led by Michael Saylor, pioneered the model for companies to hoard Bitcoin in corporate treasuries. These days it is seen as an investment vehicle for Bitcoin, and this side of the business is becoming its organizing principle.
That gamble appeared to pay off last year when Bitcoin soared higher on hopes of easier regulation. But as the sell-off in Bitcoin intensified on Thursday, risks emerged in Strategy’s long-term holding strategy that could make it difficult for the company to raise capital.
The strategy is valid now 713,502 bitcoins The average purchase price is $76,052. Bitcoin’s spot price fell to about $63,000 on Thursday, pushing the company’s unrealized losses to about $8.9 billion.
“HODL,” Saylor tweeted on Thursday, referring to a sarcastic term in the crypto community that means “hold on for your life.”
The strategy reported an operating loss of $17.4 billion in the fourth quarter, compared to an operating loss of $1 billion in Q4 2024.
It also reported a net loss of $12.4 billion, or $42.93 per share; That was well below the $5.5 billion loss to $6.3 billion profit range in which the company lowered its forecast in December from a $24 billion net profit. The Street was expecting a loss of $20.99 per share.
Revenue in software operations increased 1.9% year over year to $123 million, driven by strong growth in product licenses and subscription services.
In December, Strategy also built a US dollar reserve worth $2.25 billion, which the company said provided more than two and a half years of funding to cover its dividends. Speaking about the reserve, CFO Andrew Kang said, “Strategy’s capital structure is stronger and more resilient today than ever before.”
Listen to Strategy’s earnings call live on the stock price page.
