Strategy Returns to Profitability on $21 Billion 3Q Gain

Tiger Newspress
Yesterday

Strategy returned to profitability for the first time in four quarters after registering an unrealized gain from an increase in the value of its Bitcoin holdings during the late summer’s rally in the cryptocurrency.

The world’s largest publicly traded Bitcoin accumulator said it recorded a $21 billion gain on its digital assets in the three months ended Sept. 30. Bitcoin rose 43% during the third quarter. The company follows accounting standards that require changes in the fair value of its Bitcoin holdings to flow through earnings, driving multibillion-dollar quarterly swings in results.

Crypto stocks rallied in morning trading. Circle rose 5%; Coinbase rose 4%; Strategy and Bitmine rose 3%; Bullish and Robinhood rose 2%.

Despite the rebound, Strategy is grappling with waning demand for a variety of its securities among investors that want to gain Bitcoin exposure while not directly holding the digital asset. The firm has scaled back common stock sales amid shareholder concern about dilution and spent more than $1 billion to buy back its most popular preferred shares, which trade at a price that makes it unprofitable to issue more to fund additional Bitcoin purchases.

The firm is attempting to shore up demand for the STRC preferred shares by switching its dividend payments from semi-monthly to daily. Michael Saylor — the firm’s co-founder and executive chairman — said last week the change can lower volatility and improve liquidity for the preferred shares.

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