Strategy beats earnings expectations, rises in after-hours trading

Strategy’s shares jumped 3% in after-hours trading, following its report of third-quarter earnings today that beat analysts’ estimates.

Before the report, shares for the largest corporate bitcoin holder were down over 11% year to date. 

Revenue, which comes from its legacy software business, stood at $128.7 million, above analysts’ estimate of $117 million, according to FactSet.

The company's core focus, however, is its bitcoin operations. Strategy, with a market cap over $75 billion, holds 640,808 bitcoin. Most importantly, it reported a $12.9 billion year-to-date bitcoin gain and reported net income of $2.8 billion.

The company reiterated its full-year guidance for operating income of $34 billion and earnings per share of $80.

Earlier this week, S&P assigned Strategy a “B-” issuer credit rating (which is junk territory) with a stable outlook. This is “the first-ever rating of a bitcoin treasury company by a major credit rating agency,” cofounder Michael Saylor posted on X.

S&P cited Strategy’s “narrow business focus, high bitcoin concentration, low U.S. dollar liquidity, and very weak risk-adjusted capital offset, only partially by Strategy’s strong access to capital markets and prudent management of its capital structure.”

Other analysts have a rosier outlook, with Citi initiating coverage of the company last week, placing a “buy/high risk” rating and a target price of $485 — a 77% upside from its current price — assuming “Citi’s forward 12-month rolling base-case bitcoin forecast of $181k.”

TD Cowen analysts, meanwhile, have a $620 price target and a “buy” rating.