Strategic leadership resists growing concerns that the world’s largest corporate holder of Bitcoin (BTC) may face stern financial difficulties as the price of the cryptocurrency continues to decline.
In a speech after the company released its fourth-quarter results, CEO Phong Le sought to assure investors that the company remains in a robust position even as Bitcoin fell to near $60,000 on Thursday.
Bitcoin sell-off tests strategy’s financial resilience
Bitcoin is down about 50% since hitting a record high of $126,000 last October, a period in which Strategy, formerly known as MicroStrategy, has been aggressively accumulating digital assets.
The sale had a bulky impact on the company’s share price. Shares of Strategy, trading under the ticker MSTR, fell to around $104 on Thursday, the lowest level since August 2024, after falling more than 17% during the session.
For now, investors are focusing on two key factors: the price of Bitcoin itself and Strategy’s ability to meet its financial obligations should the economic downturn deepen. These questions seemed relevant when founder Michael Saylor and CEO Phong Le addressed analysts on a company earnings call.
Much of the attention focused on how the Strategy would cope with a prolonged “Bitcoin winter,” if one materializes. Saylor has already taken steps to escalate the company’s financial flexibility, including raising a $2.25 billion cash reserve to cover preferential dividend payments totaling $888 million annually.
However, investors remain concerned about the company’s low and zero interest rate of $8.2 billion convertible bondswhich may become subject to early redemption from September 2027, especially now that MSTR shares have plummeted.
Politics, leverage and valuation in focus
Saylor reiterated that the company is keeping its options open, including the possibility of selling Bitcoin if market conditions require it.
He also described investing in cryptocurrencies as inextricably linked to politics, pointing to President Donald Trump’s investments pro-crypto position and noting that Trump’s nominee for Federal Reserve (Fed) chairman, Kevin Warsh, is seen as a supporter of digital assets.
Still, Bitcoin fell to a post-2024 election low on Thursday, reflecting skepticism that the federal government will actively support Bitcoin purchases. Treasury Secretary Scott Bessent reinforced those doubts this week, telling Congress he had no authority to bail out Bitcoin markets.
On the balance sheet side, CEO Phong Le addressed concerns about Strategy’s leverage. He said the company uses about one-third the leverage of a typical high-yield company.
According to Le, in the case of the strategy, the value of Bitcoin would have to drop by about 90%. Bitcoin reserves only to the equal value of its convertible debt. Even in this extreme scenario, he added, the company would consider restructuring options if it failed to convert debt into equity.
Strategy’s own disclosures put its enterprise value at about $49.95 billion, compared to Bitcoin’s on-balance sheet value of about $45.33 billion. Enterprise value includes the company’s market capitalization, preferred stock and convertible bonds less cash.
If Bitcoin falls to $63,000 again, Strategy’s $35.57 billion market capitalization would need to decline by approximately 13% from its last closing price of $106.99 to eliminate the valuation premium over its Bitcoin holdings.
However, since Thursday’s crash, shares of both Bitcoin and Strategy have rebounded significantly. For example, Bitcoin rose to around $69,256. MSTR rose above $130, up 20% in less than 24 hours and providing short-term relief.
Featured image from OpenArt, chart from TradingView.com
