Here’s what financial analysts are reporting regarding Strategy following significant losses in the fourth quarter.

The figures were not favorable, yet the fourth-quarter loss does not indicate a cash shortage or the need to sell bitcoin, according to analysts.

Key points:

• Analysts from Wall Street indicate that Strategy’s significant losses in the fourth quarter are mainly non-cash accounting entries linked to the decline in bitcoin’s value, and do not reflect an impending liquidity issue or the need for forced sales.
• With approximately 713,500 bitcoins valued at nearly $50 billion against approximately $8.2 billion in convertible debt and $2.25 billion in cash, analysts contend that Strategy’s financial position can endure extended bitcoin downturns without violating debt covenants.
• Both TD Cowen and Benchmark maintain their Buy ratings, perceiving Strategy as a leveraged means for bitcoin exposure.

After Strategy (MSTR) announced its fourth-quarter earnings on Thursday, Wall Street analysts largely concur on one aspect: while the reported losses seem substantial, they do not indicate a crisis in liquidity or the necessity for selling bitcoin.

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Strategy reported a $17.4 billion operational loss and a $12.6 billion net loss for the quarter, with these numbers primarily driven by non-cash mark-to-market accounting associated with bitcoin’s BTC$65,998.81 price decline. Both TD Cowen and Benchmark noted that the market’s response overlooked this context, resulting in a share price drop of around 17% on a day when bitcoin and other risk assets were already facing downward pressure.

On Friday, shares increased by 21% as bitcoin rebounded from the previous day’s low of $60,000, rising above $70,000.

The two analysts concur that the main discussion revolves around solvency rather than profitability. Strategy holds 713,502 bitcoins valued at nearly $50 billion at current market rates, against approximately $8.2 billion in convertible debt. Benchmark analyst Mark Palmer stated that the company would only encounter significant balance-sheet difficulties if bitcoin fell below $8,000 and remained there for an extended period. Management highlighted during the earnings call that none of its debt agreements include covenants or triggers related to bitcoin’s price or its average acquisition cost.

TD Cowen’s Lance Vitanza also emphasized the resilience of Strategy’s capital structure. He suggested that the company was intentionally designed to magnify bitcoin’s volatility, with common equity trading at about 1.5 times the fluctuations of bitcoin. This leverage has dual implications. Vitanza mentioned that the firm’s $2.25 billion cash reserve and staggered debt maturities indicate there is no plausible scenario in which Strategy would be compelled to sell bitcoin in the short term, even if prices remain low.

Where analysts differ is more about the framing of the situation than the inherent risk. TD Cowen focused on Strategy’s function as a “digital credit engine,” noting its expanding preferred equity business and the liquidity of its STRC preferred stock, which offers an 11.25% annualized dividend. Conversely, Benchmark placed greater emphasis on the long-term trajectory of bitcoin’s price and the potential embedded in Strategy’s equity should bitcoin experience a rally.

Both firms maintain a positive outlook on the stock. Benchmark reaffirmed a Buy rating with a $705 price target, based on a sum-of-the-parts analysis that anticipates bitcoin reaching $225,000 by the end of 2026. TD Cowen also sustained a Buy rating, asserting that Strategy continues to be one of the most effective ways for investors to achieve leveraged bitcoin exposure outside of ETFs, although it did not specify a particular price target in its report.