Strategy, listed on NASDAQ as MSTR stock, holds over 528,000 Bitcoin (BTC). At the end of March, those holdings were worth around $43.5 billion.
Since then, Bitcoin has gained more than 30%, increasing the value of those assets to almost $14 billion. Additional Bitcoin purchases during the quarter added another $600 million in unrealized profit.
Bitcoin-Driven Gains Push Strategy Toward $14B Q2 Profit
According to Google Finance data, MSTR stock climbed 8% today as the company edges closer to reporting a $14 billion second-quarter gain. The surge is tied almost entirely to the rising value of Bitcoin, not to the growth in its core business.
A recent accounting change now requires Strategy to reflect Bitcoin’s market value on its balance sheet. This policy switch replaces an older method that only allowed gains to be recorded when Bitcoin was sold.
The update means quarterly earnings now swing widely with Bitcoin’s price. Analysts expect just $112.8 million in revenue from the software business for the second quarter.
However, the company may still post a profit of $14 billion for the second quarter, which rivals top US corporations, according to a Bloomberg report. Only a few firms, such as JPMorgan and Amazon, are expected to report over $10 billion in Q2 profit. MSTR stock has drawn renewed attention as investors consider the impact of this projected windfall.
MSTR Stock Soars 40% in Q2, Outpacing Bitcoin as Investors Embrace High-Leverage Crypto Bet
Some, like short-seller Jim Chanos, argue the premium baked into the share price is unjustified. He believes it’s smarter to buy Bitcoin directly and short the stock.
Michael Saylor, Strategy’s chairman, has rejected that view. He argued that BTC’s place on a corporate balance sheet provides long-term financial strength.
Since 2020, MSTR stock has outperformed Bitcoin itself. While Bitcoin rose roughly 1,000% over that period, the company’s shares have climbed over 3,300%.
In Q2 alone, the stock gained 40%, easily beating the S&P 500’s 11% advance. Similarly, Japan’s Metaplanet reported a 42% QoQ revenue jump in its Bitcoin business surpassing the S&P 500’s Q2 revenue growth estimates.
There are also various investors buying Strategy preferred shares like STRK. This will provide high yields for them and confirms the aggressive financial model of the company.
Strategy has also been using stock, debt and preferred shares to finance its Bitcoin purchases. As the value of Bitcoin increases, the stock is proving attractive to crypto bulls and institutional traders.
Paul
Paul Adedoyin is a crypto journalist with 4+ years experience who provides timely news, in-depth research, and insightful content to inform and empower his audience. His works have been featured on sites such as CryptoMode, CryptoNewsFlash among others.
He holds a degree in Geophysics from OAU, Nigeria. When he’s not writing, he loves watching soccer and reading educative journals.
He can be reached via [email protected]
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
