Strategy Reports $12.4 Billion Loss Amid Bitcoin Decline
Strategy reported a net loss of $12.4 billion for the fourth quarter, primarily attributed to losses on its Bitcoin holdings during a period of declining cryptocurrency values. The company, which holds a substantial amount of Bitcoin, saw its financial performance and stock price significantly impacted by market conditions.
Financial Performance
For the three months ending December 31, Strategy recorded a net loss of $12.4 billion, or $42.93 per share. This figure compares to a loss of $670.8 million, or $3.03 per share, in the fourth quarter of 2024.
The company's stock experienced its lowest point in 18 months, falling more than 17% to $107 per share on the day of the earnings report. Over the past six months, Strategy's stock declined approximately 71%, and it saw a 76% decrease from a high of $457 last year.
In 2025, Strategy's shares decreased by approximately 47.5%, while Bitcoin prices fell by 6.4%, reflecting the stock's exposure to the cryptocurrency market. Following the earnings release, shares decreased by 1.5% in after-hours trading and have declined nearly 30% year-to-date.
Bitcoin Holdings and Valuation
As of February 1, Strategy held 713,502 Bitcoins, acquired at a total cost of $54.26 billion, averaging $76,052 per Bitcoin. With Bitcoin trading around $63,140, the company faces an unrealized loss of nearly $9 billion on these holdings, which were valued at approximately $45.4 billion. Bitcoin's price recently dropped below Strategy’s average purchase price.
During the three-month period ending December 31, Strategy acquired approximately 35,000 additional Bitcoins.
Strategy has positioned itself as a leveraged Bitcoin investment, accumulating its holdings through preferred shares and convertible debt. The company established cash reserves of $2.25 billion last year to cover dividend payments on its preferred stock, which are projected to last for 30 months.
According to Strategy's website, the company's enterprise value has neared the value of its Bitcoin holdings, resulting in a market-adjusted Net Asset Value (mNAV) of 1.1. This metric indicates that Strategy has been valued at a discount to its Bitcoin holdings since late November, which has made it more challenging for the company to increase its Bitcoin per share by issuing common stock.
Management Commentary
During an earnings call, Andrew Kang, Strategy's Chief Financial Officer, reiterated the company's long-term vision:
"Our strategy is built for the long term. It's built to withstand short-term price volatility, even short-term extreme conditions like we're seeing today, and importantly, even in a volatile environment, we continue to execute."
Strategy co-founder and Executive Chairman Michael Saylor also commented on the company's position:
"Strategy has built a digital fortress anchored by 713,502 Bitcoin, and our shift to digital credit, which aligns with our indefinite Bitcoin horizon."
Saylor also posted "HODL" on X before the earnings results were released. He further expressed confidence in regulatory developments and corporate adoption of cryptocurrencies, referring to these as "fundamentals." When questioned about the nomination of Kevin Warsh as Federal Reserve chair, Saylor commented that determining or interpreting financial policy was beyond their scope.
Phong Lee, Strategy's President and CEO, highlighted the adoption of the company’s variable-rate preferred share, STRC, describing it as a "flagship Digital Credit instrument" valued at $3.4 billion, currently paying 11.25% monthly.
Market Context and Outlook
The decline in Bitcoin's value coincided with a turbulent period for digital assets. Cryptocurrencies, including Bitcoin, experienced regulatory acceptance and institutional inflows for much of 2025, but the sector faced challenges following a significant decline in October, which saw Bitcoin's value nearly halve from its peak.
In December, Strategy had reduced its 2025 earnings forecast, citing Bitcoin's weak performance, and announced plans for a dividend support reserve. Their prior estimate had projected Bitcoin reaching $150,000 by year-end.
Deutsche Bank analysts noted that U.S. spot Bitcoin ETFs experienced outflows of approximately $2 billion in December and $7 billion in November. Selling pressure in the broader market increased following the nomination of Kevin Warsh as Federal Reserve chair, a development analysts suggested could result in a smaller Fed balance sheet, potentially impacting risk assets like cryptocurrencies negatively.
Investors have expressed concern as the company's shares have fallen significantly.
Traders on Myriad, a prediction market, estimated a 32% chance that Strategy will sell some of its Bitcoin holdings this year, an increase from 10% a week prior.