What’s Happening With Strategy Stock?
Strategy (NASDAQ:MSTR) stock has gained a solid 45% year-to-date in 2025, tracking the gains in Bitcoin prices which recently topped $120,000 for the first time. Since 2020, the company has pivoted from being a traditional business intelligence software provider to becoming a Bitcoin investment vehicle. Instead of holding cash and short-term investments, Strategy uses Bitcoin as its primary treasury reserve asset. Although it still continues to offer enterprise analytics software, the company’s fortunes are largely tied to the cryptocurrencies’ performance. As Bitcoin continues to climb with institutional interest building, the question is how far can Strategy stock go with this playbook? As cryptocurrencies have started to move again, see Will The Rally In XRP Price Continue?
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How Strategy Delivers Value
Strategy currently holds approximately 597,000 BTC on its balance sheet, worth over $65 billion, with unrealized gains of more than $22 billion. The company sees Bitcoin Yield (“BTC Yield”) as its key operating metric, tracking the rise in Bitcoin owned per outstanding share. It achieved a 13.7% BTC Yield year-to-date in 2025. This rising yield is attractive for investors looking for increasing Bitcoin exposure. So how does the company boost yield? Strategy uses capital raised from issuing new shares – especially when its stock trades at a premium to underlying Bitcoin – to purchase more Bitcoin relative to the dilution that the additional shares would cause. This allows the company to buy a greater amount of Bitcoin per new share issued, resulting in a net increase in BTC owned per share outstanding.
Strategy has raised capital through both debt and equity, including a $21 billion stock-sale plan announced in March. While Bitcoin per share is growing, the broader outlook for BTC prices also appears favorable. Institutional interest and ETF inflows into BTC are rising, and cryptocurrencies in general are also seeing more support from the current U.S. administration. The possibility of lower or stable interest rates and easing geopolitical headwinds could also help risky assets like Bitcoin.
The Risk Beneath the Rally
Strategy’s stock has outpaced Bitcoin, rising 650% compared to Bitcoin’s 180% gain over the past year, driven by its leveraged exposure. However, this high-reward strategy carries significant risks. Strategy’s core operations remain weak. Strategy’s Operating Income over the last four quarters was $-66 million, which represents a very poor Operating Margin of -14.5% Strategy’s Operating Cash Flow (OCF) over this period was $-84 million, pointing to a very poor OCF Margin of -18.3% (vs. 14.9% for S&P 500). With limited cash generation, the company relies heavily on raising equity to fund Bitcoin purchases and manage its debt load. A sudden and steep drop in Bitcoin’s price could strain the company’s finances, especially given the scale of its leverage. The company had over $8.1 billion in long term debt outstanding as of March 2025, up from about $7.1 billion in the year-ago quarter.
While you would do well to be careful with MSTR stock, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
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