Strategy’s $12.4B Q4 Loss and 18‑Month Low in MSTR Put Its Bitcoin Premium—and Credit Engine—to the Test

Strategy’s Q4 print reads like a stress test of its core idea: use equity and credit to scale a massive Bitcoin treasury and let the market award a premium. The premium is the story now. With enterprise value nearly matching the value of its coins and mNAV at 1.1, investors have been marking Strategy at a discount to its Bitcoin since late November. That shift undercuts the firm’s most reliable flywheel—issuing stock above net Bitcoin value to accrete BTC per share.

The equity pressure is visible. MSTR fell more than 17% to $107 ahead of earnings, an 18‑month low, and is down roughly 71% over six months—about 76% below last year’s $457 high—while Bitcoin declined 44% over the same span. The firm reported a fourth‑quarter net loss of $12.4 billion, or $42.93 per share, as Bitcoin retreated from an October all‑time high above $126,000. Despite the drawdown, Strategy added about 35,000 BTC during Q4, continuing to lean into its mandate.

The balance sheet tells the trade-off. Strategy holds 713,502 Bitcoin. At roughly $63,000 per coin this week, the stack is valued near $45.4 billion, versus aggregate purchases of $54.2 billion since 2020—implying an unrealized loss approaching $9 billion. Bitcoin also slipped below the firm’s average purchase price of $76,000 earlier this week. That math isn’t fatal for a long-duration thesis, but it complicates near-term financing because every incremental issuance risks dilution without growing BTC per share.

Management is trying to bridge that gap with “digital credit.” The company’s variable‑rate preferred, STRC, has become the flagship funding tool—now a $3.4 billion instrument that currently yields 11.25% on a monthly pay schedule. To calm dividend‑coverage concerns, Strategy built $2.25 billion in cash reserves, which it says can fund preferred payouts for 30 months. That buys time, but it also hardens the capital stack: high-coupon liabilities require confidence that Bitcoin’s future appreciation will outrun the carry.

Psychology and positioning matter here. Michael Saylor framed the company as anchored by 713,502 BTC and reiterated its pivot toward digital credit to match an indefinite Bitcoin horizon; he also posted “HODL” on X ahead of results. CFO Andrew Kang emphasized that the strategy is designed to withstand sharp price swings and that execution continues despite volatility. Yet investors have grown impatient, in part because the premium that once rewarded that posture has vanished. Without that premium, the playbook of issuing common to buy more BTC becomes tougher, slowing the per‑share accumulation that attracted many shareholders in the first place.

There’s a new risk investors are gaming: optionality around selling coins. Some observers worry that a sale would pressure Bitcoin; Saylor acknowledged last year that selling could be considered under certain circumstances. A prediction market on Myriad recently assigned a 32% probability that Strategy sells some BTC this year, up from 10% a week prior. That shift doesn’t make a sale likely, but it signals creeping doubt about perpetual one‑way accumulation.

The fulcrum now is trust in the structure. If the market restores a premium to the Bitcoin stack, Strategy regains the ability to add coins accretively via equity. If the discount persists, funding tilts further to credit, with carry costs rising relative to the asset’s realized volatility. The firm has time—cash for preferreds, ample BTC collateral, and a clear mandate—but the next leg depends less on slogans and more on whether Bitcoin can sustainably reclaim levels above the $76,000 cost basis or whether Strategy can innovate financing that preserves per‑share economics even at mNAV ~1.1.