Strategy (MSTR), the largest publicly traded corporate holder of Bitcoin, is experiencing a significant downturn in its financial standing due to its vast cryptocurrency holdings. The company currently possesses 713,502 BTC, acquired at an average price of $76,052 per Bitcoin. However, with Bitcoin trading near $67,000, Strategy faces an unrealized loss of nearly $6.5 billion, reflecting approximately 12% losses relative to its investment.
The company’s stock has taken a hit as well, declining around 13% on Thursday, marking the largest single-day drop in nearly a year. Year-over-year, the stock has plummeted by 66% and remains approximately 80% below its peak following Donald Trump’s election victory in November 2024.
Interestingly, despite these steep losses, Strategy maintains a market capitalization that reflects a modest premium over the Bitcoin assets on its balance sheet. The multiple of net asset value (mNAV) is currently about 1.09, suggesting that the company could potentially continue to issue common stock for further Bitcoin purchases without negatively impacting shareholder value.
Strategy is set to release its fourth-quarter earnings report later Thursday. While no major surprises are anticipated, investors are keen to hear insights from Michael Saylor, especially in light of the recent market volatility.
Meanwhile, the company’s perpetual preferred equity instrument, STRC, is trading around $95, below its par value of $100. If it does not recover to par by the end of the month, the dividend rate will increase by 25 basis points to 11.5%. The comparable perpetual preferred equity from Strive (ASST) is also struggling, trading down approximately 4% at $86, which similarly may necessitate an increase in dividends to regain its value.
Despite these challenges, there remains opportunity for Strategy to capitalize on market fluctuations moving forward. The upcoming earnings call could provide critical insights and reassure investors about the company’s long-term strategy in navigating these turbulent conditions.