Wall Street analysts covering the strategy (MSTR) are broadly in agreement on one thing following the company’s fourth-quarter earnings release Thursday: The overall losses appear dramatic, but they do not signal a liquidity crisis or forced sell-off of Bitcoin.
Strategy reported an operating loss of $17.4 billion and a net loss of $12.6 billion for the quarter, numbers largely driven by non-cash mark-to-market accounting related to bitcoin. drop in prices. TD Cowen and Benchmark said the market reaction failed to take that context into account, sending shares down about 17% on a day when bitcoin and other risk assets were already under pressure.
Stocks rose 21% on Friday as bitcoin climbed from yesterday’s low of $60,000 back above $70,000.
Both analysts agree that the central debate is about solvency and not profitability. Strategy holds 713,502 bitcoins, worth nearly $50 billion at current prices, against about $8.2 billion in convertible debt. Benchmark analyst Mark Palmer said the company would only face real financial stress if bitcoin fell below $8,000 and stayed there for years. Management emphasized on the earnings call that none of its debt has covenants or triggers tied to the price of Bitcoin or its average purchase cost.
Lance Vitanza of TD Cowen also focused on the sustainability of the capital structure. He argued that the strategy was designed to amplify Bitcoin’s volatility, with common stocks trading at about 1.5 times Bitcoin’s fluctuations. This leverage goes both ways. Vitanza said the company’s $2.25 billion cash reserves and staggered debt maturities mean there is no reasonable scenario in which Strategy would be forced to sell Bitcoin in the near term, even if prices remain depressed.
Where analysts differ is less on risk than on framing. TD Cowen delved into Strategy’s role as a “digital credit engine,” highlighting the growth of its preferred stock business and the liquidity of its STRC preferred stock, which pays an 11.25% annualized dividend. Benchmark placed more weight on Bitcoin’s long-term price action and the strategy’s built-in equity optionality in the event of a Bitcoin rally.
Both companies remain constructive on the stock. Benchmark reiterated a buy rating with a price target of $705, based on a sum-of-the-parts model that assumes bitcoin reaches $225,000 by the end of 2026. TD Cowen also maintained a buy rating, arguing that the strategy remains one of the most effective ways for investors to gain exposure to leveraged bitcoin outside of ETFs, although it did not disclose a target specific price in its note.
