Strategy (MSTR) Stock Trades Up, Here Is Why

What Happened?

Shares of bitcoin development company Strategy (NASDAQ:MSTR) jumped 7.5% in the afternoon session after its third-quarter revenue topped Wall Street's estimates and it posted a massive profit, driven by unrealized gains on its large Bitcoin portfolio. 

The company, a major corporate Bitcoin holder, reported a GAAP profit of $8.42 per share. While this missed analysts' consensus, the result represented a significant turnaround from a loss in the same period last year. This swing was primarily due to paper gains on its Bitcoin holdings, which increased to 640,808 BTC. Operationally, total revenue for the quarter grew 10.9% year-over-year to $128.7 million, exceeding expectations. Strategy's business model is closely tied to the cryptocurrency's price, making its financial results subject to large swings.

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What Is The Market Telling Us

Strategy’s shares are extremely volatile and have had 69 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 4 days ago when the stock gained 2.7% on the news that the company disclosed it had purchased an additional 390 Bitcoin for approximately $43.4 million. The acquisition, which took place between October 21 and October 26, increased Strategy's total holdings to 640,808 BTC, solidifying its position as the largest corporate holder of the digital asset. According to a company filing, the purchase was financed without issuing new common stock, which prevented the dilution of existing shareholders' ownership. This latest move reinforced the company's strategy of using its balance sheet to acquire Bitcoin, a tactic that has made its stock a popular proxy for investors seeking exposure to the cryptocurrency's price movements.

Strategy is down 9.6% since the beginning of the year, and at $271.13 per share, it is trading 42.8% below its 52-week high of $473.83 from November 2024. Investors who bought $1,000 worth of Strategy’s shares 5 years ago would now be looking at an investment worth $16,287.

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