MSTR Stock Rises Despite $8.22 Billion Quarterly Loss

Strategy shares climbed sharply on Thursday despite the company reporting an $8.22 billion net loss for the second quarter. The loss was so big largely because of a decline in the value of its Bitcoin holdings.

Strategy stock closed the July 30 trading session at $97.74, after gaining 4.73% from the previous close of $93.33. The shares were largely unchanged after the earnings release, edging approximately 0.01% higher to $97.75 in after-hours trading.

Strategy stock price (Source: Google Finance)

The positive stock performance suggests that investors focused less on the headline loss and more on Strategy’s Bitcoin position, liquidity reserves and ability to meet its financial obligations.

Bitcoin Decline Drives Strategy’s Quarterly Loss

Strategy recorded an $8.32 billion unrealized loss on its Bitcoin holdings during the quarter. Bitcoin fell approximately 14% between the beginning of April and the end of June, declining from around $68,000 to roughly $58,600, according to CoinCodex data.

Because Strategy holds Bitcoin as a major treasury asset, movements in the cryptocurrency’s price can have a massive effect on its reported earnings.

As of July 26, the company held 843,775 BTC, which is a 25% increase from the beginning of the year. Bitcoin recovered to approximately $64,700 by Thursday afternoon, although it stayed below its price at the start of the second quarter.

Strategy Bitcoin holdings (Source: BitcoinTreasuries.NET)

Strategy also disclosed that it sold approximately $218.4 million worth of Bitcoin through its recently introduced BTC monetization program. The proceeds were used to help fund a portion of the company’s preferred stock dividend obligations.

Around $216 million of those Bitcoin sales took place in early July, after the second quarter had ended.

Strategy Builds $3.75 Billion Cash Reserve

The company said it has established a $3.75 billion US dollar reserve that could cover more than two years of preferred dividend payments and interest obligations.

Strategy also recently repurchased $25 million of its STRC preferred shares while they were trading below their $100 par value. The company indicated that it may continue repurchasing the securities for as long as they stay available at a discount.

Although the quarterly loss shed some light on Strategy’s exposure to Bitcoin price volatility, the stock’s 4.7% daily gain showed that investors seem reassured by the company’s liquidity position and long-term Bitcoin strategy.