Strategy's Stock Rises 1.20% Despite Class-Action Lawsuit

Strategy, a company listed on the NASDAQ under the ticker MSTR, saw its stock price rise by $4.78, or 1.20%, from its latest closing price of $399.80 to $404.58 on Monday. This increase came despite the revelation that the company is facing a class-action lawsuit. The lawsuit, filed by Pomerantz, was disclosed on Sunday, May 18, and alleges that Strategy made false or misleading statements regarding the profitability of its Bitcoin-focused investment strategy and treasury operations. The lawsuit also claims that the company understated the risks associated with Bitcoin's volatility and the potential losses it could incur on the value of its digital assets following the adoption of Accounting Standards Update No. 2023-08.

The lawsuit was triggered by a $5.91 billion loss disclosure on April 7, 2025, which led to an 8.67% drop in the company's stock price. Despite this, Strategy has continued to acquire Bitcoin, purchasing 7,390 BTC for approximately $764.9 million at an average price of $103,498 per Bitcoin. As of May 18, 2025, the company holds 576,230 BTC, acquired for approximately $40.18 billion at an average price of $69,726 per Bitcoin. The company's continued investment in Bitcoin, despite the lawsuit and market pressures, indicates its confidence in the long-term potential of the cryptocurrency.

Investors' reaction to the lawsuit has been muted, with the stock price entering a rapid rally immediately after the morning bell on Monday. This upswing is surprising given the adverse economic news in the second half of May, including a downgrade of the U.S. credit rating by Moody's, which has turbocharged the already-rising 30-year treasury yield. The company has expressed its intent to fight the lawsuit vigorously, but it is not yet known how much money the plaintiffs are demanding.

The lawsuit alleges that Strategy's CEO, Michael Saylor, offered severely misleading data on the performance of its Bitcoin strategy. The plaintiffs claim that the company made false or misleading statements regarding the anticipated profitability of its Bitcoin investment strategy and treasury management, and that it understated the risks associated with Bitcoin's volatility. The lawsuit also claims that the company's public statements were materially false and misleading at all relevant times.

Despite the lawsuit and market pressures, Strategy has continued to acquire Bitcoin on a weekly basis. The company's continued investment in Bitcoin, despite the lawsuit and market pressures, indicates its confidence in the long-term potential of the cryptocurrency. The company's stock price has rallied despite the lawsuit, and it remains to be seen how the situation will develop in the coming weeks and months.