Strategy Records $14 Billion Gain, Joins Corporate Giants

Michael Saylor’s Strategy has left Wall Street in awe as the company, once a struggling software and business intelligence firm, recorded approximately $14 billion in unrealized gains during the second quarter. This remarkable achievement has elevated Strategy to the ranks of corporate giants, including Amazon.com Inc. and JPMorgan Chase & Co. This elite tier is typically reserved for a select few U.S. companies whose operating profits exceed $10 billion quarterly, generating billions in revenue.

The dramatic turnaround from near-obscurity is attributed to Bitcoin’s price recovery in April and May, as well as a recent change in Strategy’s accounting methodology regarding the valuation of its substantial cryptocurrency holdings. According to projections, Strategy is expected to generate approximately $112.8 million in second-quarter revenue from its traditional software operations.

Despite the record performance, Strategy faces intensified criticism from prominent skeptics, including renowned short-seller Jim Chanos. During a recent podcast episode, Chanos criticized Strategy’s treasury strategy and advised investors to short MSTR stock while purchasing Bitcoin directly. He argued that the large premium the stock commands over its token holdings will eventually contract. Chanos also revealed that Strategy was being considered for S&P 500 inclusion, though this decision has reportedly been delayed until September.

Saylor maintains that most critics fundamentally misunderstand Strategy’s business model. He has faced criticism for over four years, yet his company has dramatically outperformed both single stocks and the broader S&P 500 index. Strategy’s shares (MSTR) have skyrocketed more than 3,130% since Saylor initiated Bitcoin purchases in mid-2020 as an inflation hedge. During the same timeframe, Bitcoin has gained approximately 1,000%, while the S&P 500 has risen around 115%. The stock rose 40% in the second quarter, outperforming the S&P’s 11% gain.

Strategy’s substantial Bitcoin holdings are beginning to translate into profitability primarily due to anticipated modifications in cryptocurrency asset accounting regulations. Despite widespread awareness of the accounting methodology change, the first-quarter loss has attracted several class-action lawsuits alleging that Strategy executives made false and misleading statements that harmed shareholders. Strategy stated its intention to “vigorously defend against these claims” in a recent Securities and Exchange Commission filing.

Saylor’s Bitcoin accumulation strategy has inspired numerous imitators seeking to replicate his success. Other companies are also adapting the approach for different cryptocurrency tokens. For example, SharpLink Gaming Inc. is accumulating Ether, the second-largest cryptocurrency, while Upexi Inc. recently raised $100 million to purchase Solana tokens. A group of hedge fund executives recently attempted to raise $100 million to acquire BNB, Binance’s native token, through a publicly traded vehicle. Most recently, BitMine Immersion Technologies’ stock soared 511% after announcing a $250 million private placement dedicated entirely to Ethereum accumulation as part of its Ether treasury strategy.