Strategy reports fourth straight quarterly loss, deepens bitcoin focus with rebranding

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Strategy reports fourth straight quarterly loss, deepens bitcoin focus with rebranding

By Arasu Kannagi Basil and Niket Nishant

(Reuters) -Strategy, the biggest corporate holder of bitcoin, reported a fourth consecutive quarterly loss on Wednesday as the company booked an impairment charge on its stockpile of the cryptocurrency.

The Tysons Corner, Virginia-based company booked impairment losses from digital assets of $1.01 billion in the quarter, compared with $39.2 million a year ago.

Strategy, formerly known as MicroStrategy and founded by Michael Saylor, has emerged as one of the biggest beneficiaries of the soaring popularity of bitcoin. Its shares jumped nearly five-fold last year, helping it secure a spot in the Nasdaq 100 index in December.

The company began buying bitcoin in 2020 as revenue from its software business waned. Last year, Strategy unveiled plans to raise $42 billion over the next three years to buy more bitcoins.

Strategy has completed $20 billion of the capital plan and held about 471,107 bitcoins with a market value of $46 billion as of Feb. 2.

The company bought 218,887 bitcoins for $20.5 billion in the quarter, marking Strategy’s largest ever increase in quarterly bitcoins holdings.

Strategy is shifting its focus more to fixed-income issuance this year, including convertible bonds and preferred stock, CEO Phong Le said on a post-earnings call.

The company’s net loss was $670.8 million, or $3.03 per share, in the three months ended Dec. 31, compared with a profit of $89.1 million, or 50 cents per share, a year earlier.

Strategy will also move to a new accounting rule in the first quarter, allowing it to measure the fair value of its bitcoin holdings.

Chief Financial Officer Andrew Kang said the fourth quarter will be the last when it recognizes an impairment charge on its bitcoin holdings.

NEW NAME

The company earlier in the day said it would now operate as “Strategy” and unveiled a new logo to emphasize its commitment to the cryptocurrency space.

The rebranding was “a natural evolution” as it seeks to integrate bitcoin — the world’s biggest and best-known cryptocurrency — into the heart of its business operations, the company said.

Bernstein analyst Gautam Chhugani said the company probably wanted to emphasize bitcoin as its core business and to distance away from the software arm, which is no longer material.

The company continues to be an aggressive investor in bitcoin. In the statement on Wednesday announcing its rebranding, MicroStrategy defined itself as the world’s “first and largest Bitcoin Treasury Company”.

Its new logo includes a stylized “B” that signifies its bitcoin strategy, it said.

(Reporting by Niket Nishant and Arasu Kannagi Basil in Bengaluru; Editing by Shilpi Majumdar and Maju Samuel)

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