After Strategy (MSTR) reported fourth-quarter earnings on Thursday, Wall Street analysts generally agreed: The overall losses looked severe but did not indicate a liquidity crisis or a 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, figures driven primarily by non-cash mark-to-market accounting related to Bitcoin. Prices drop. TD Cowen and Benchmark both said the market reaction ignored this context, sending shares down about 17% on a day when Bitcoin and other risk assets were already under pressure.
Shares rose 21% on Friday as Bitcoin recovered from yesterday’s low of $60,000 to over $70,000.
Both analysts agree that the core debate centers on solvency, not profitability. Strategy holds 713,502 Bitcoins, worth nearly $50 billion at current prices, while convertible debt is approximately $8.2 billion. Benchmark analyst Mark Palmer said the company will only face real balance sheet pressure if Bitcoin falls below $8,000 for multiple years. Management emphasized on the earnings call that none of its debt contains covenants or triggers related to the price of Bitcoin or its average purchase cost.
TD Cowen’s Lance Vitanza also looks at the durability of capital structures. He believes the strategy is designed to amplify Bitcoin’s volatility, with common stocks trading at about 1.5 times Bitcoin’s volatility. This leverage works both ways. Vitanza said the company’s $2.25 billion in cash reserves and staggered debt maturities mean Strategy is unlikely to be forced to sell Bitcoin in the short term, even if prices remain depressed.
Analyst disagreements are less about risk and more about framework. TD Cowen capitalized on Strategy’s role as a “digital credit engine,” highlighting its growing preferred stock business and the liquidity of STRC preferred stock, which pays an 11.25% annualized dividend. Benchmark places more emphasis on Bitcoin’s long-term price action and the optionality embedded in Strategy stock as Bitcoin rises.
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 leveraged Bitcoin exposure outside of ETFs, although it did not disclose a specific price target in its notes.