Strategy records $12.4B loss in Q4, shares dip 17% as Bitcoin tumbles

Strategy Inc., the software firm known for its aggressive Bitcoin accumulation strategy, announced disastrous preliminary results for the fourth quarter, reporting a colossal net loss of $12.4 billion. The loss is primarily attributed to significant impairment charges taken against its vast holdings of Bitcoin (BTC), following a sharp downturn in the cryptocurrency market during the quarter.

The massive impairment reflects the mandatory accounting adjustment required when the market price of BTC falls below the carrying cost established during acquisition. As Bitcoin tumbled by over 35% during Q4, Strategy’s balance sheet took a proportionate hit, erasing all gains made earlier in the year.

Following the earnings announcement, investor confidence evaporated. Strategy’s shares plunged 17% in pre-market trading, adding to months of consistent pressure linked to the volatility of its primary treasury asset. Analysts note that Strategy’s valuation has become almost fully correlated with Bitcoin’s price movements, leading to extreme sensitivity to crypto market dips.

Despite the staggering loss, CEO Michael Saylor (implied) reaffirmed the company’s commitment to its ‘HODL’ strategy, stating that the impairment represents short-term accounting noise and does not affect the long-term conviction in Bitcoin as a superior store of value. However, institutional pressure mounts for the company to diversify its treasury holdings or scale back its highly leveraged crypto position.

Source: Strategy records $12.4B loss in Q4, shares dip 17% as Bitcoin tumbles