MicroStrategy Stock Falls After a Steep Loss. Bitcoin Prices Explain the Earnings Miss.

MicroStrategy

reported a loss of $3.09 a share on revenue of $115.2 million in the first quarter, below the loss of 55 cents a share on revenue of $121.7 million expected among analysts surveyed by FactSet. 

This financial performance isn’t all that important. MicroStrategy is nominally a software company, including in crypto development, but in actuality it is an investment vehicle for Bitcoin.

“MicroStrategy is committed to the continued development of the Bitcoin network through our activities in the financial markets, advocacy and technology innovation,” said Phong Le, MicroStrategy president and CEO since August 2022, in a statement accompanying the earnings release. Le gave a secondary mention to subscription revenue from software.

MicroStrategy’s Executive Chairman Michael Saylor—the company’s co-founder, and chairman and CEO for much of its existence—is one of the most high-profile proponents of the world’s largest digital asset.

Saylor set MicroStrategy on a path of relentless Bitcoin buying starting in 2020 and the company hasn’t looked back. The stock, which was down 7.5% in Tuesday’s premarket, tracking a decline in Bitcoin prices, is up some 750% since the company began adding crypto to its corporate treasury in August 2020.

By the end of the first quarter, MicroStrategy held 214,400 Bitcoins—more than 1% of all tokens that will ever be in circulation—at an average purchase price of $35,180 per Bitcoin, including more than 25,000 tokens acquired since the end of 2024. At Bitcoin’s current price around $62,000, those total crypto holdings are worth $13.3 billion.

Bitcoin prices are up almost 50% so far this year and hit a record high near $74,000 in mid-March, finishing the first quarter around $71,000, which would give MicroStrategy’s Bitcoin stash a market value of $15.2 billion. 

So why did the company report such a large surprise loss? It has to do with accounting technicalities. Assets like Bitcoin aren’t covered under legacy accounting rules, so companies record them as “intangible assets” and write down their value if the price drops below the purchase price. Gains can only be recorded if the assets are sold. 

Guidance late last year from the Financial Accounting Standards Board allowed companies to report crypto under “fair value” accounting rules, meaning that gains and losses linked to digital assets can be reported similarly to traditional financial assets. However, MicroStrategy has yet to adopt the new rules, and as a result included a $191.6 million impairment charge on its digital asset holdings in the first quarter.

“While some investors had hoped that MicroStrategy would…announce that it had opted for early adoption of Financial Accounting Standards Board guidance issued last December…such an announcement did not occur,” Benchmark analyst Mark Palmer wrote in a note. “Instead, management said it was still deciding when to adopt FASB’s guidance, which will be required for companies that hold Bitcoin on their balance sheets as of Jan. 1, 2025.” 

Benchmark rates MicroStrategy stock at Buy with a $1,875 price target. The stock closed at $1,292.97 on Monday. Palmer wrote that the price target was based on a sum-of-the-parts analysis that combines an estimate of both the value of the company’s Bitcoin holdings and enterprise software business as of the end of 2025.

Investors should look past the short-term slide in MicroStrategy stock and the superficial bad news from earnings. MicroStrategy buys Bitcoin relentlessly, including with debt, essentially making the stock a vehicle to get leveraged Bitcoin exposure in a way that many retail investors can’t through, for instance, spot Bitcoin exchange-traded funds (ETFs). 

Ignore MicroStrategy’s stock price, and just check the price of Bitcoin.

Write to Jack Denton at [email protected]