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The miracle of valuing the company’s stock far higher than its bitcoin holdings came unglued. Then bitcoin plunged.

Digital Asset Treasury companies – the DATs – are getting crushed as the hot air comes out of cryptos. They’re an ingenious concept, pioneered in 2020 by Michael Saylor, CEO of MicroStrategy, which is now Strategy, when he transformed a tiny enterprise software outfit from the Dotcom Bubble and Bust into the largest corporate holder of bitcoin, by funding bitcoin purchases mostly with the sale of shares and also some debt, while his fans put a much higher price on the company’s stock than on the bitcoin it was holding. And the stock price exploded. And soon there were the copycats because this was just too good to pass up.

Today, Strategy, the “largest corporate holder of bitcoin,” as it says, reported a pre-tax loss of $17.5 billion for Q4, and a net loss of $12.6 billion, and a net loss per share of $42.93, as the price of bitcoin had plunged by the end of Q4.

In its report, Strategy also gave an update on its bitcoin holdings as of February 1: It held 713,502 bitcoins, acquired over the years at an average cost of $76,052 per bitcoin.

At the moment, bitcoin trades at around $63,000, having plunged by roughly 50% from its all-time high four months ago. At this price, Strategy’s bitcoin holdings are $9.3 billion in the hole, but that doesn’t really matter as long as Strategy can keep raising new money by selling more shares.

Strategy is a money-raising machine. In all of 2025, it raised $25 billion from the sale of shares and debt, to buy bitcoin with the proceeds. In Q4 alone it raised $5.6 billion. And its fans were still buying this stuff so far this year: Since the end of Q4, it raised an additional $3.9 billion, it said today.

Strategy’s stock is kind of funny, with its two WTF spikes.

During the Dotcom Bubble and Bust, the stock of enterprise software company MicroStrategy had spiked into the sky and then imploded by 99.6% amid admissions of revenue overstatements. But it survived, unlike many other outfits of that era, and still has this business, which produced $123 million in revenues in Q4.

But in 2020, Saylor pivoted to the new and ingenious business model, a first in this world possibly, of selling mostly shares and also some debt and use the proceeds to acquire bitcoin, while flooding the media with all kinds of bitcoin hype, which caused the stock to explode to $473.88 a share at the peak in November 2024, surpassing even the Dotcom Bubble high.

Its market cap, at the peak in mid-July 2025 of nearly $130 billion, far exceeded the value of its crypto holdings of $73 billion at the end of Q3 2025. In other words, the company was valued at nearly $2 for each $1 in cryptos it held.

Since that peak, shares [MSTR] have plunged by 77%, including 17% today, straight into our pantheon of Imploded Stocks, for which the minimum requirement is a 70% plunge from the more or less recent all-time high.

The earnings report is through Q4 and does not yet reflect the price action of bitcoin more recently, but the stock price may reflect it (data via YCharts):

The ingenious miracle came unglued.

After the pivot in 2020, Strategy’s stock was valued at a far higher price than its bitcoin holdings. So when it sold shares via its “Common Stock ATM Program” (which allows for opportunistic sales of Class A common stock) and used the proceeds to buy bitcoin, the stock would rise further because for each $1 billion of bitcoin it bought, its market cap would rise by $2 billion or whatever, as the stock’s fans put a far higher value on the shares than what the company’s bitcoin holdings were worth…..

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