Strategy Reports Significant Q4 Loss Amid Continued Bitcoin Accumulation

February 5, 2024—MicroStrategy has officially rebranded itself as ‘Strategy,’ unveiling a new logo that features a stylized “B,” symbolizing its position as the world’s largest corporate holder of Bitcoin (BTC). This change was accompanied by a stark financial report highlighting a substantial impairment loss of $670.8 million in the fourth quarter of 2024, primarily attributed to the company’s Bitcoin assets.

Financial Overview

The latest earnings report, released on February 5, indicated that Strategy suffered a net loss of $670.8 million, or $3.03 per share, compared to a profit of $89.1 million, or 50 cents per share, reported in the same quarter the previous year. Much of this dramatic decline was due to an impairment charge of $1.01 billion on its Bitcoin holdings, contrasting sharply with the $39.2 million impairment recorded in the same period last year.

Looking ahead, the company is optimistic that such impairment charges will become a thing of the past. Starting in the first quarter of 2025, Strategy will implement new fair-value accounting rules introduced by the Financial Stability Accounting Board. This move is expected to allow the company to reflect the actual market value of its Bitcoin holdings in its financial statements, which could help stabilize its reported earnings and reduce volatility in future reports.

Bitcoin Acquisition Strategy

Despite facing significant financial losses, Strategy remains steadfast in its commitment to Bitcoin acquisition. The company marked its most significant investment yet in the fourth quarter, purchasing 218,887 BTC at a staggering price of $20.5 billion. As of now, Strategy holds a total of 471,107 BTC, valued at approximately $46 billion. Notably, the most recent acquisition occurred on January 27, when the company purchased 10,107 BTC for roughly $1.1 billion.

Stock Market Impact

Strategy’s aggressive accumulation strategy has not gone unnoticed in the stock market. Throughout 2024, shares of Strategy rallied, surging nearly five-fold and consequently earning the company a place in the Nasdaq 100 index in December 2023. However, following the release of the latest earnings report, investor sentiment appeared to wane. On February 5, shares of MSTR fell by 3.33%, closing at $336.70; despite this decline, stock prices have risen over 12% year-to-date.

Financing Approach and Future Plans

In light of the ongoing focus on its Bitcoin strategy, Strategy is also altering its approach to financing. CEO Phong Le announced that in 2025, the company will prioritize fixed-income financing options, including convertible bonds and preferred stock. Last year, Strategy set an ambitious target to raise $42 billion over three years to support its Bitcoin acquisition plans, with $20 billion already secured.

Adding to this new financing strategy, Michael Saylor, executive chairman, revealed that for the first time in 12 weeks, the company did not sell any shares to fund Bitcoin purchases during the week of January 27 to February 2. This signals a potential shift in strategy, although the company remains committed to its aggressive accumulation of Bitcoin in the future.

Conclusion

As Strategy enters a new chapter under its rebrand and adapts its financial strategies, its focus on Bitcoin accumulation appears stronger than ever. With new accounting methods on the horizon and significant investments already made, the company aims to solidify its standing in the cryptocurrency market while navigating the challenges presented by recent financial losses.