Strategy revealed its fourth-quarter financial results on Thursday amidst a challenging environment, reporting significant paper losses due to the recent downturn in Bitcoin’s value.
With Bitcoin trading near $63,000, the company faced an unrealized loss approaching $9 billion on its cryptocurrency assets, which were valued at approximately $45.4 billion. Since 2020, Strategy has invested about $54.2 billion in Bitcoin; however, the asset’s price recently fell below their average purchase cost of $76,000.
During the quarter ending December 31st, Strategy posted a net loss of $12.4 billion—equivalent to a loss of $42.93 per share—as Bitcoin’s price dropped sharply from its October peak above $126,000. Despite this decline, the firm acquired roughly 35,000 additional Bitcoins within that period.
Prior to releasing these earnings figures, Strategy’s stock price plunged over 17% to reach $107—a level not seen in eighteen months—according to Yahoo Finance data. Over the last six months alone, shares have tumbled by around 71%.
“We have constructed a robust digital stronghold anchored by our holding of 713,502 Bitcoins and our transition toward digital credit solutions aligned with our long-term commitment to Bitcoin,” stated Michael Saylor—co-founder and Executive Chairman—in his message to shareholders.
Saylor is well-known for his steadfast “buy-and-hold” approach regarding Bitcoin investments; he even tweeted “HODL,” crypto slang for “hold on for dear life,” shortly before earnings were announced—a phrase embraced widely among cryptocurrency enthusiasts as a symbol of unwavering confidence.
Although Saylor remains optimistic about Strategy’s future prospects with Bitcoin holdings intact, investors are growing increasingly concerned as shares have plummeted approximately 76% from their peak near $457 last year. Additionally, some analysts worry that if Strategy opts to liquidate any portion of its BTC reserves—a scenario Saylor acknowledged might occur—it could exert further downward pressure on Bitcoin prices.
The company’s stock decline has outstripped bitcoin’s own roughly 44% drop over six months, dampening investor enthusiasm toward what is effectively a leveraged bet on bitcoin accumulation funded through preferred equity and convertible debt instruments.
In response to concerns about dividend sustainability related to preferred shares, Strategy set aside cash reserves amounting to around $2.25 billion. According to information published on their website, these funds are sufficient cover for dividend payments spanning thirty months into the future.
The company’s President and CEO Phong Lee emphasized adoption success surrounding their variable-rate preferred share offering known as STRC. This flagship Digital Credit product currently yields an attractive monthly return rate of 11.25%, representing total issuance worth approximately $3.4 billion.
The enterprise valuation closely mirrors that of Strategy’s underlying bitcoin holdings resulting in an mNAV (market Net Asset Value) ratio near 1.1, according to official sources. This metric accounts both debts owed and available cash balances unlike other measures focused solely upon market capitalization.
Consequently,
since late November,the firm has been trading at somewhat less than its intrinsic bitcoin value alone would suggest .
This diminishing premium throughout recent times makes it more difficult for Strategy
to boost bitcoins owned per common share via new stock issuances — one
of their typical strategies employed previously .
A prediction market called Myriad — operated by DASTAN , parent entity behind Decrypt —
recently assigned just under one-third probability (32%)
that this year will see some sale activity involving part
of company’s BTC stash ; up significantly compared with only ten percent chance recorded seven days prior .