Strategy (MSTR) Rated 'B-' By S&P After $8.1B Bitcoin Gains

"S&P said the rating reflects Strategy's "high bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low U.S. dollar liquidity." The company reported $8.1 billion in pre-tax earnings in the first half of 2025, almost entirely from appreciation in the value of its bitcoin holdings. The firm said in their release that while Strategy's balance sheet is dominated by bitcoin, its management has prudently staggered debt maturities and maintained flexibility by financing primarily with equity."

"Strategy - now effectively a bitcoin treasury company - raises capital through equity and debt issuances to purchase and hold bitcoin. Its securities give investors varying exposure to bitcoin across its capital structure. Just today, founder and former CEO Michael Saylor announced a purchase of 390 BTC between October 20 and October 26, spending approximately $43.4 million at an average price of $111,053 per Bitcoin. The firm still operates a small AI-powered analytics business, though it remains roughly breakeven."

"This S&P rating is the first-ever rating of a Bitcoin Treasury Company by a major credit rating agency. According to S&P, Strategy's risk-adjusted capital ratio was significantly negative as of June 30, 2025, because the agency deducts bitcoin assets from equity in its calculation. Strategy reported $8.1 billion in pre-tax earnings in the first half of 2025. Operating cash flow during the period was negative $37 million."

S&P Global Ratings assigned Strategy a B- issuer credit rating with a stable outlook, citing high bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low U.S. dollar liquidity. Strategy reported $8.1 billion in pre-tax earnings in H1 2025, driven almost entirely by appreciation in bitcoin holdings, while operating cash flow was negative $37 million. Management has staggered debt maturities and financed primarily with equity to retain flexibility. Strategy raises capital via equity and debt to acquire and hold bitcoin. Founder Michael Saylor purchased 390 BTC for about $43.4 million. S&P's methodology deducts bitcoin assets, leaving a significantly negative risk-adjusted capital ratio and elevated default risk if markets worsen.

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