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Strategy Earnings Reveal the Real Risk Behind MSTR Stock
Submitted by Chris Markoch. Article Posted: 2/6/2026.
Article Highlights
- Strategy’s quarterly results are dominated by Bitcoin accounting swings, not the performance of its software business.
- The company’s Bitcoin position is effectively debt-funded leverage, which can amplify gains — and losses — for shareholders.
- With Bitcoin below Strategy’s reported average purchase price, the stock’s risk profile looks closer to a leveraged Bitcoin bet than a traditional software play.
Strategy (NASDAQ: MSTR) stock is down a little over 2% after the company reported its fourth-quarter 2025 earnings following market close on Feb. 5. The results highlight a familiar theme for MSTR investors: quarterly performance is now driven far more by Bitcoin accounting than by the company's underlying software operations.
While Strategy continues to grow its analytics revenue at a steady, modest pace, headline numbers remain volatile because of changes in the value of its massive Bitcoin holdings. That dynamic made the report look weak on the surface even as the company doubled down on its long-term Bitcoin-focused strategy.
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Discover how to invest in the fund Trump uses to collect this income >>Heading into earnings, analysts projected adjusted earnings per share (EPS) of $46.02, compared with an EPS loss of $3.03 in the prior year. Mainly due to realized Bitcoin losses, Strategy missed that number by a wide margin, posting a loss of $42.93 for the quarter.
What Every Investor Should Understand About Strategy
Strategy is no longer primarily a software company — just as GameStop Inc. (NYSE: GME) is not primarily a video game retailer. Although its roots are in software, Strategy has pivoted to operate as a Bitcoin treasury.
Put simply, the company is a leveraged play on Bitcoin that also generates some software revenue. That distinction is critical to understanding recent results and the stock's risk profile.
The company has accumulated a substantial Bitcoin position. At the end of 2025, Strategy owned 713,502 Bitcoin at a total cost of $54.26 billion, with an average cost of $76,052 per Bitcoin — roughly 3% of the world's Bitcoin supply.
Strategy's Debt-Funded Bitcoin Bet Raises Leverage and Liquidation Risk
How Strategy bought its Bitcoin is the larger issue. The company financed much of its purchases by issuing convertible debt in the form of secured notes.
For investors, that means Bitcoin is the company's largest asset by far, but it is funded with debt — in other words, the position is leveraged.
If Bitcoin rises, the value of the BTC can increase faster than the debt, magnifying gains for shareholders. If Bitcoin falls, however, losses are magnified — which is what's occurring now.
It gets worse. As of this writing, Bitcoin trades around $63,169. That is roughly 16% below Strategy's average purchase price.
Remember that while Strategy still operates a software business, it is no longer the primary driver of the company's valuation. Even if it were, the software sector has been hit by the broader tech shakeout.
Additionally, the recently adopted GENIUS Act has legitimized Treasury-backed stablecoins. Some analysts argue this weakens Bitcoin's transactional use case and its appeal as a store of value.
That leads to the elephant in the room: could the company be forced to sell Bitcoin? According to Polymarket, the odds of a forced sale are around 26%.
Strategy Stock Is Not for Every Investor
No matter how it's portrayed, investing in Strategy is effectively an investment in Bitcoin.
More precisely, investing in Strategy is a leveraged bet on Bitcoin. That approach rewards investors when Bitcoin rises, as it did for much of 2024.
But when Bitcoin falls — as it has since late 2025 — MSTR stock can decline even more. The stock is down nearly 58% in the last three months.
Of course, gains and losses are unrealized until an investor sells. Those who believe Bitcoin will recover and who have the time and risk tolerance to wait could see a buying opportunity.
For now, analysts maintain a consensus price target on MSTR stock of $417.38, which would imply a roughly 290% increase from its closing price on Feb. 5. However, owning MSTR increasingly resembles a leveraged wager on Bitcoin's recovery — an investment with asymmetric upside and downside risk.
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