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Strategy Earnings Reveal the Real Risk Behind MSTR Stock
Authored 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 earnings following the market close on Feb. 5. The report underscored a familiar theme for MSTR investors: quarterly results are 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 swings 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. Largely because of realized Bitcoin losses, Strategy missed that forecast by a wide margin, posting a loss of $42.93 for the quarter.
What Every Investor Should Understand About Strategy
Strategy is not a software company any more than GameStop Inc. (NYSE: GME) is a video game company. While the firm began in software, it has since pivoted to operate primarily as a Bitcoin treasury.
Put simply, it's a leveraged play on Bitcoin that also produces some software revenue. That distinction is critical for investors to grasp.
The company has accumulated a sizable Bitcoin position. At the end of 2025, Strategy owned 713,502 Bitcoin at a total cost of $54.26 billion, for an average cost of $76,052 per Bitcoin. The company owns roughly 3% of the world's Bitcoin.
Strategy's Debt-Funded Bitcoin Bet Raises Leverage and Liquidation Risk
How Strategy bought its Bitcoin is the bigger issue. The company financed most purchases by issuing convertible debt in the form of secured notes.
The takeaway: Bitcoin is Strategy's largest asset, but it's largely funded with debt — that is leverage.
If Bitcoin rises, the value of those holdings can grow faster than the debt, amplifying gains for shareholders. If Bitcoin falls, losses are magnified — which is what's happening now.
As of this writing, Bitcoin trades around $63,169, about 16% below Strategy's average purchase price.
Remember that while Strategy still operates a software business, it no longer drives the company's valuation. Even if it did, the software sector is currently being hit by a broader tech shakeout.
Additionally, the recently adopted GENIUS Act has legitimized Treasury-backed stablecoins; some analysts say this could weaken Bitcoin's transactional utility and its appeal as a store of value.
That brings up the elephant in the room: could the company be forced to sell Bitcoin? According to Polymarket, the odds that it will be forced to sell stand around 26%.
Strategy Stock Is Not for Every Investor
No matter how investors dress it up, buying Strategy is essentially buying Bitcoin.
Because the position is debt-funded, investors are taking leveraged bets on Bitcoin. That approach rewarded shareholders while Bitcoin was rising, as it did for much of 2024.
But when Bitcoin falls, as it has since late 2025, MSTR shares tend to fall further. The stock has dropped nearly 58% in the last three months.
Of course, gains and losses are unrealized until investors sell. Those who believe Bitcoin will recover and who can hold through volatility may view current prices as a compelling buying opportunity.
For now, analysts still have a consensus price target on MSTR stock of $417.38, which would represent about a 290% gain from its closing price on Feb. 5. However, betting on MSTR increasingly looks like gambling amid the Bitcoin selloff — and that is the asymmetric risk investors face.
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