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Strategy Earnings Reveal the Real Risk Behind MSTR Stock
Written by Chris Markoch. Article Posted: 2/6/2026.
In Brief
- 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 earnings following market close on Feb. 5. The report underscored a familiar theme for MSTR investors: quarterly results are 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 reiterated its long-term Bitcoin-focused strategy.
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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 estimate by a wide margin, posting a loss of $42.93 for the quarter.
What Every Investor Should Understand About Strategy
Strategy is not primarily a software company anymore — much like GameStop Inc. (NYSE: GME) is no longer just a video game retailer. Though the company started in software, it has pivoted into operating as a Bitcoin treasury.
Put simply, Strategy is a leveraged play on Bitcoin that also generates some software revenue. That distinction is critical for understanding the company's risk profile.
The company has accumulated a substantial Bitcoin stake. At the end of 2025, Strategy held 713,502 Bitcoin with a total cost basis of $54.26 billion, or an average cost of $76,052 per coin. That represents roughly 3% of the world's Bitcoin supply.
Strategy's Debt-Funded Bitcoin Bet Raises Leverage and Liquidation Risk
How Strategy financed those purchases is the larger issue. The company largely funded its Bitcoin acquisitions by issuing convertible debt in the form of secured notes.
The takeaway for investors is that Bitcoin is Strategy's largest asset by far, but it's financed with debt — in other words, the company is leveraged to the price of Bitcoin.
If Bitcoin rises, the value of the company's BTC increases faster than the debt, magnifying gains for shareholders. But if Bitcoin falls, losses are also magnified — which is what investors are seeing now.
It gets worse. As of this writing, Bitcoin trades around $63,169 per coin, about 16% below Strategy's average purchase price.
Remember that while Strategy does have a software business, it's no longer the primary driver of the company's valuation. Even if it were, the software and broader tech sector has been under pressure recently.
Additionally, the recently adopted GENIUS Act has helped legitimize treasury-backed stablecoins, and some analysts argue that could weaken Bitcoin's transactional use case and its appeal as a store of value.
Which brings us to the elephant in the room: could the company be forced to sell Bitcoin? According to Polymarket, the odds it would be forced to sell are around 26%.
Strategy Stock Is Not for Every Investor
No matter how investors frame it, buying Strategy is effectively buying Bitcoin exposure.
More precisely, investors are making leveraged bets on Bitcoin. That worked well when Bitcoin was rising, as it did for much of 2024.
But when Bitcoin falls, as it has since late 2025, MSTR stock tends to fall even more sharply. The stock is down nearly 58% in the last three months.
Of course, losses are only realized when shares are sold. Investors who believe Bitcoin will recover and who have the time and risk tolerance to hold through volatility could view the current price as a buying opportunity.
For now, analysts still have a consensus price target on MSTR stock of $417.38, which would imply about a 290% gain from its closing price on Feb. 5. But betting on MSTR increasingly resembles betting on the direction of Bitcoin — and amid the recent selloff, that creates an asymmetric risk profile.
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