Bitcoin Treasury Firm Sees Drop in Q3 Profit
Bitcoin treasury firm Strategy (ticker MSTR) reported a third-quarter profit of $2.8 billion, a significant decrease from the previous quarter’s high of $10 billion. This drop comes as Bitcoin’s recent rally lost steam, and the company’s valuation premium has continued to shrink.
Despite this decline, the results exceeded analysts’ expectations, with diluted earnings at $8.42, beating forecasts of $8.15. However, it’s worth noting that this marks the company’s weakest quarter since it adopted fair value accounting back in January.
On Wednesday, Strategy’s stock closed at approximately $254, reaching its lowest price in nearly six months. Post-market trading saw a 4% increase following the earnings announcement. In the meantime, Bitcoin’s price is hovering around $107,000, which is about 15% lower than its all-time high earlier in October.
The decline in Bitcoin prices has led to a drop in Strategy’s mNAV multiple. This figure, which compares the company’s total value to the amount of Bitcoin it holds, now stands at around 1.2x—its lowest since March 2023. This is a stark decline from a peak of 3.9x last November, which was fueled by Donald Trump’s election win and Bitcoin’s remarkable ascent from under $70,000 to nearly $100,000 in value.
According to the SaylorTracker dashboard, Strategy—currently the largest Bitcoin treasury company—added about 43,000 Bitcoins during the quarter, resulting in total holdings of 640,808 BTC. This amounts to just under $69 billion based on current market prices.
This addition is a downshift from 69,000 BTC in Q2 and over 80,000 BTC in Q1, marking the slowest quarterly accumulation of the year as weekly purchases tapered off along with mNAV premiums.
Strategy relies heavily on high-yield preferred stocks that it set up to finance its Bitcoin acquisitions without issuing common stock. These stocks, which bear tickers like STRC, STRF, STRK, and STRD, offer fixed or variable dividends and are traded independently of the common stock.
The company announced an increase in the variable rate STRC dividend for November, raising it to 10.5% from 10.25% the previous month. Higher interest rates can attract investors during price declines, and the dividends are mainly funded through continued issuance of preferred stock rather than operational cash flow. This strategy allows Strategy to keep accumulating Bitcoin, even as its stock price and mNAV diminish.
