Strategy (MSTR) Earnings Approach: What To Expect

As Strategy Inc. (MSTR), formerly MicroStrategy, prepares to release its earnings report today, after market close, analysts are keenly watching to see if the company can deliver on its ambitious strategy of integrating Bitcoin holdings with advanced AI solutions. The stock, currently trading at $267, down 3% on the day.

Analysts expect MicroStrategy to report earnings per share (EPS) of $9.67, a significant turnaround from – $1.72 in the same quarter last year, reflecting a dramatic improvement in profitability. Revenue is projected at approximately $116.93 million, representing modest 0.7% year-over-year growth, indicating relatively stable sales. This potential turnaround is largely attributed to the company's strategic shift towards AI-driven business intelligence, highlighted by the launch of “Mosaic,” an AI-powered Universal Intelligence Layer, earlier this year.

However, the shadow of Bitcoin looms large. Strategy Inc.'s stock performance remains inextricably linked to the cryptocurrency's price fluctuations. The company's aggressive accumulation of Bitcoin, funded through debt and equity offerings, has amplified both its potential upside and downside risks.

Several key events have shaped the narrative surrounding Strategy Inc. Rebranding from MicroStrategy to Strategy in February, complete with a Bitcoin-inspired logo, signaled the company's unwavering commitment to its cryptocurrency strategy.

The launch of Strategy Mosaic in June, integrating data from over 200 sources to automate semantic modeling, underscores the company's efforts to diversify and leverage AI for growth. The Subscription Services segment saw a 61.6% year-over-year revenue increase, reaching $37.1 million in Q1 2025, providing a tangible sign of progress.

Strategy Inc.'s financial maneuvers, including an $875 million convertible senior notes offering in September 2024 and a $563.4 million preferred stock offering in January, highlight its aggressive capital-raising strategies to fund Bitcoin acquisitions. These moves have raised concerns about the company's debt burden and its reliance on external financing.

Analyst ratings present a diverse range of opinions. Cantor Fitzgerald raised its price target for Strategy from $614 to $680 in July, maintaining an “Overweight” rating, suggesting confidence in the company's long-term prospects. However, other analysts are more cautious, with price targets ranging from $200 to $680, averaging $488.85, indicating a 20.44% upside from the current price. TD Cowen reduced its price target from $1,560 to $1,450 in September, citing the stock's sensitivity to Bitcoin's performance.

While the prevailing narrative focuses on Strategy Inc.'s innovative blend of Bitcoin and AI, a contrarian perspective raises concerns about the company's long-term sustainability. Are the markets overlooking the inherent risks associated with tying the company's fate so closely to a volatile asset like Bitcoin?

Strategy Inc.'s aggressive debt-fueled Bitcoin acquisitions have created a leveraged bet that could backfire if the cryptocurrency market experiences a prolonged downturn. The company's reliance on external financing to fund its Bitcoin strategy also raises questions about its ability to generate sustainable organic growth. Despite the potential of Mosaic, the AI business and its revenue contribution is still small compared to the overall valuation and Bitcoin treasury.

Moreover, the rebranding and the influx of capital raises the question of whether Strategy Inc. is genuinely committed to its AI initiatives or simply using them as a smokescreen to justify its Bitcoin obsession. A critical examination of the company's R&D spending and its ability to attract and retain top AI talent is warranted. Perhaps the market exuberance is misplaced, and a more cautious approach to Strategy Inc.'s stock is advisable.

As Strategy Inc. prepares to announce its earnings, one should carefully weigh the potential upside of its AI initiatives against the risks associated with its Bitcoin strategy. The upcoming earnings report will provide crucial insights into the company's financial performance and its ability to execute its ambitious vision.