Analyst Says Strategy Stock (MSTR) Rally Has No “Precedent in American History” After 11,600% Loss

Strategy (MSTR), the world’s first Bitcoin (BTC-USD) treasury, reported a massive operating loss of $14.47 billion during its Q1 2026 earnings call. Although the decline was roughly 116 times larger than the company’s revenue, its stock price still surged on earnings day. Independent analyst Shanaka Anslem Perera said this is probably the first time in U.S. corporate history that a market reaction like this has been recorded. 

Bitcoin Decline Triggers Massive Paper Loss for Strategy

In an X post on May 6, Perera spoke on Strategy’s operating loss and stock surge on the same day. He said that despite the oddity, the rally was not driven by baseless hype.  

He said, “It is difficult to find a precedent in American corporate history for a company reporting an operating loss 116 times its revenue and seeing its share price rise on the same day.”

Perera explained that Strategy’s reported loss was mostly due to accounting changes under Accounting Standards Update (ASU) 2023-08. The rules required companies to mark their bitcoin holdings to fair value. 

This means companies must record their Bitcoin holdings as a loss if the price drops and a gain if otherwise. Therefore, when Bitcoin fell approximately 23% in Q1, Strategy recorded a massive loss. 

At the time, the company held about 762,099 Bitcoin, leading to about $14.46 billion in unrealized paper losses. Perera noted that Strategy did not sell any BTC during the quarter. This indicates that its decline was mainly due to accounting rather than to realized cash losses. 

Despite the drop, Strategy’s software business reportedly grew 11.9% compared to the previous year. At the same time, it maintained a 67.1% gross margin. For this reason, Perera argued that the firm’s operating business kept growing even as Bitcoin’s volatility affected its earnings. 

Strategy also disclosed that it held 818,334 BTC as of May 3, after buying 63,410 BTC this year. This purchase was made through the ATM stock offering and its STRC (STRC) perpetual preferred shares. 

Each token was bought for about $75,537 per BTC, which is cheaper compared to the cryptocurrency’s current market price of over $80,000. This places its treasury at roughly $2.3 billion above cost basis. 

Analyst Warns Strategy is Becoming A Bitcoin Bank

Perera argued that the Strategy’s latest earnings call revealed a major shift in its long-term Bitcoin strategy. In February, CEO and Executive Chairman Michael Saylor denied claims about forced Bitcoin sales. He said the company held “50 years’ worth of dividends in Bitcoin.”

However, during the May 5 earnings call, Saylor said the company could eventually “sell Bitcoin to pay the dividend”. The analyst claimed that this was a major shift from the company’s earlier “never sell” position. 

Based on the analysis, Perera said Strategy now operates more like a leveraged Bitcoin carry trade. This is when a firm uses equity and selective financing to gain more Bitcoin while relying on a price surge to fund services and pay shareholders returns. 

Perera also pointed out that the Strategy’s report about the value of its custom BTC yield metric could be overstated. This is because it excludes borrowing costs and does not fully account for preferred shareholders’ rights. 

He concluded that Strategy is turning into a “Bitcoin bank without a license.” He noted that the firm is making a very risky financial decision by borrowing at high rates and focusing on one volatile asset. The analyst added that this approach may cause the firm to sell its BTC holdings to pay shareholders. 

Is MSTR a Good Buy Right Now? 

Wall Street analysts rate Strategy (MSTR) a Strong Buy, based on TipRanks consensus data. The stock currently trades around $182, with an average price target of $330.08 and an 86.26% upside potential. For more information on the performance, price target, and rating of this stock, visit TipRanks Stocks Comparison Center.