Strategy's $64B Bitcoin position is $10B under water at current prices. The stock is down 35% YTD, worse than Bitcoin's 25% decline. Alpha Score: 29/100.
Michael Saylor's Strategy (NASDAQ: MSTR) holds 840,447 Bitcoin, roughly 4% of all coins in circulation. The position cost $64 billion to build at an average price of $75,482 per coin. Bitcoin now trades near $65,000. The holdings are worth about $54 billion. That leaves a $10 billion paper loss.
The company has always been a leveraged bet on Bitcoin. When the price rises, Strategy reports large paper gains. When it falls, the losses flow through earnings. That dynamic is playing out now. Strategy's stock is down 35% year to date. Bitcoin is down 25% over the same period. The leverage cuts both ways.
Strategy has suspended new Bitcoin purchases and introduced a capital management plan designed to support its stock offerings, both common and preferred. A key part of that plan is a new willingness to sell Bitcoin to raise cash for operations. The company had promised it would never do that. If there is one firm associated with the advice "never sell your Bitcoin," it is Strategy.
The company has been transparent about its holdings. Quarterly earnings reports detail the position. Social media posts track purchases and sales. The homepage of Strategy's website is a dashboard of numbers and metrics about its Bitcoin stash. The only number that matters now is the price of Bitcoin. As long as it stays below $75,482, the paper loss will grow.
Investors who want exposure to Bitcoin are better off holding the asset directly. Strategy adds leverage, management risk, and a stock structure that compounds losses on the way down. The stock's 35% year-to-date drop shows what that looks like in practice.
Strategy's Alpha Score on AlphaScala is 29 out of 100, rated Weak. The stock page is available here.
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Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy .
Michael Saylor's Strategy Has Spent $64 Billion Buying Bitcoin at an Average Price of $75,482 a Coin. Here's Why That Position Is Sitting on a $10 Billion Paper Loss Today. was originally published by The Motley Fool
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