- Strategy (formerly MicroStrategy) lowered its earnings per share (EPS) guidance by 76-121% for the year ending December 31, 2025.
- The company announced $1.44 billion in stock dilution without using those funds to buy Bitcoin (BTC), reducing existing shareholders’ value.
- Strategy diluted shares at a valuation below 0.9 times net asset value (NAV) and enterprise value multiples fell to 1.17 times NAV.
- Bitcoin holdings of 650,000 BTC, valued at $55 billion, have dropped in market value, impacting unrealized earnings and EPS.
- The company now considers selling BTC to cover debt and dividend obligations, marking a shift from previous commitments.
Strategy, the bitcoin holding company previously known as MicroStrategy, announced a significant reduction in its earnings per share (EPS) forecast this morning. The new guidance range spans from $19 to negative $17 per share, down from the original EPS target of $80, marking a 76% decrease for the fiscal year ending December 31, 2025.
The company revealed that it carried out $1.44 billion in common stock dilution, but unlike previous offerings that funded bitcoin purchases, these proceeds were not used to acquire additional BTC. Instead, the funds were converted to U.S. dollars, which diluted shareholder value of MSTR, the company’s stock.
The dilution was executed at a basic multiple of net asset value (mNAV) below 0.9 times, and an enterprise value mNAV of just 1.17 times. This represents a sharp decline in investor confidence, with the mNAV multiple falling from 3.4 times in November 2024.
Strategy holds approximately 650,000 BTC units valued at $55 billion, with an average cost per coin of $74,436. Due to a decrease in bitcoin’s market value by about 11% year-to-date, the company’s bitcoin-related unrealized gains have turned negative, contributing to the lowered EPS forecasts.
CEO Phong Le and the company have suggested that BTC sales might be contemplated to cover dividend payments and debt servicing if the market values remain below a 1x multiple of net asset value. This contrasts with prior statements that the company would hold its entire BTC treasury and not sell bitcoin.
More details can be found in the company’s SEC filing and their recent tweet regarding dividend coverage.
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