TLDR
- MicroStrategy will report Q1 earnings on May 1-2, with analysts expecting $116.7M revenue and $0.11 loss per share
- The company holds over 471,000 Bitcoins valued near $46 billion, making it the world’s largest corporate Bitcoin treasury
- Wall Street has a Strong Buy consensus with 12 Buy ratings and only 1 Sell
- Average price target of $508-$510 implies 33-38% upside from current levels
- Options traders expect a 5% stock move in either direction following earnings announcement
MicroStrategy, now known as Strategy, is set to announce its first-quarter earnings results this Thursday, May 1, after market close. The software company turned Bitcoin treasury has Wall Street’s attention focused more on its massive cryptocurrency holdings than its traditional business operations.
Analysts are expecting revenue of around $116.7 million for the quarter. This represents a slight year-over-year growth of 1.2%.
The company is forecast to post a loss of $0.11 per share. This is an improvement from the $0.31 per share loss reported in the same quarter last year.
Strategy’s transformation from a standard enterprise software company to what some analysts call a “Bitcoin vault with a side hustle in cloud analytics” has dramatically changed how investors view the stock.
The firm now holds over 471,000 Bitcoins. This massive crypto treasury is valued at approximately $46 billion.
Bitcoin Volatility Impact
Strategy’s financial performance has become heavily tied to Bitcoin price movements. In April alone, Bitcoin dropped more than 12%.
This price decline shaved billions off Strategy’s balance sheet value. The company’s stock price tends to mirror Bitcoin’s movements almost directly.
This close correlation makes quarterly performance predictions challenging. Recent accounting changes have also affected how these holdings appear on financial statements.
Strategy has adopted the Financial Accounting Standards Board’s new fair-value accounting rules at the beginning of the year. These rules require the company to report changes in the market value of its Bitcoin holdings on its income statement.
In a portion of Q1 results released earlier this month, Strategy reported a $5.91 billion unrealized loss on its Bitcoin holdings. This was partially offset by a $1.69 billion income tax benefit.
Despite these paper losses, Strategy’s Bitcoin holdings have grown at an impressive compound annual growth rate of 59% over the 2020-2024 period, according to Main Street Data.
Beyond Crypto: The Software Business
Strategy isn’t completely abandoning its original business model. Its cloud services segment continues to show growth.
In its last report, subscription revenue grew 48% year-over-year. Subscription billings jumped even higher at 57%.
This traction in recurring revenue helps balance the company’s image. Management is trying to position Strategy as more than just a Bitcoin investment vehicle.
Investors will be closely watching for updates on the software business during the earnings call. Any improvements in this segment could help reduce the perception of the company as a pure crypto play.
The stock has rallied 32% year-to-date despite Bitcoin’s recent volatility. This suggests some investors see value beyond just the cryptocurrency holdings.
Wall Street analysts remain largely positive on Strategy’s prospects. Of 13 analysts tracked over the past three months, 12 rate the stock a Buy, with only one Sell recommendation.
The average price target sits at approximately $510, implying potential upside of around 35% from current levels. Price targets range from a bearish $175 to a bullish $650.
Several prominent analysts have recently weighed in on the stock. Five-star analyst Lance Vitanza of TD Cowen reiterated a Buy rating with a $550 price target on April 28.
H.C. Wainwright analyst Mike Colonnese initiated coverage with a Buy rating and $480 price target. He called Strategy “one of the most compelling equity investment vehicles” for Bitcoin exposure.
Benchmark analyst Mark Palmer maintains a Buy rating with a $650 price target, the most optimistic on Wall Street.
Options traders are preparing for potential volatility following the earnings report. Current options pricing suggests traders expect about a 5% move in either direction in reaction to the results.
Strategy’s earnings report comes during an interesting period for both the tech sector and cryptocurrency markets. Investors will be watching closely for management’s future plans regarding both Bitcoin acquisition strategy and software business development.
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