MicroStrategy Smashes Q3 with $2.8B Net Income Surge, Yet Bitcoin Premium Dips to 1.3×
MicroStrategy just posted numbers that would make traditional CFOs blush—$2.8 billion in net income for Q3. That's not just beating expectations; it's bulldozing them.
The Bitcoin Backbone
While the tech world obsesses over AI, MicroStrategy keeps stacking digital gold. Their treasury strategy remains the most aggressive corporate Bitcoin play in history—no hedging, no apologies.
Premium Compression Reality Check
Here's where it gets interesting: the premium over their Bitcoin holdings has tightened to just 1.3 times. Translation? The market's starting to value the actual business, not just the crypto piggy bank. Because nothing says 'mature investment' like your corporate valuation finally aligning with your asset sheet—except maybe Wall Street analysts pretending they understood blockchain all along.
Bottom line: MicroStrategy continues betting bigger on Bitcoin than most firms would on their core business. Whether that's visionary or reckless depends entirely on which way the crypto winds blow next.
Analysts react and warn about fourth-quarter pace
TD Cowen analyst Lance Vitanza told clients that after three strong quarters, the fourth quarter began slower than expected. He wrote:
“4Q is off to a slow start, with reduced Bitcoin price appreciation and a dramatic reversal in Bitcoin premium leading to a very slow pace of capital issuance and quarter-to-date BTC yield measured in basis points rather than percentage points.”
MicroStrategy was previously known as a modest enterprise software firm. That changed in 2020 when Michael Saylor, who co‑founded the company and now serves as chairman, redirected the firm’s capital into Bitcoin.
Since then, the company’s stock has been valued not mainly on earnings growth but on the size of its Bitcoin holdings and the multiple that investors assign to those holdings.
That valuation method is known as market‑adjusted net asset value, or mNAV. The multiple sat above 2× at times in earlier stages of the strategy, but is about 1.3× today.
Cantor Fitzgerald analyst BRETT Knoblauch said that a lower mNAV multiple reduces the company’s ability to raise funds through capital markets because there is less valuation excess to convert into financing. He noted that mNAV fell below 1× during the Terra‑Luna collapse, but later recovered.
Knoblauch also said that for MicroStrategy to meet its $20 billion fourth‑quarter operating income guidance, Bitcoin WOULD need to reach $150,000 by year‑end. Bitcoin is currently trading just above $110,000, and it has never surpassed $127,000.
Cantor Fitzgerald, TD Cowen, and Maxim Group all maintained buy‑equivalent ratings despite the price target cuts. MicroStrategy’s shares ROSE as much as 7% on Friday, but they are still over 40% below the record peak reached in November 2024.
Saylor increases preferred share yields to secure funding
During the earnings call, Michael Saylor said the company is raising the yield on its preferred shares, which he has marked as the primary funding method going forward. He said:
“We are kind of in an inflection point we believe, our multiple of net asset value has been trending down over time as the Bitcoin asset class matures and the volatility decreases.”
The goal of the increased yield is to shore up demand at a time when the premium is lower.
Chief Executive Officer Phong Le said MicroStrategy is looking to international markets to raise capital and is considering exchange‑traded funds backed by the preferred shares.
The company currently faces about $689 million in annual interest and dividend expenses, which adds pressure to secure reliable funding.
Mark Palmer, an equity research analyst at Benchmark Equity Research, said that the higher yield would likely add only modest additional expense compared to the capital the company could raise and the Bitcoin it could acquire.
Palmer maintains a buy rating on the company.
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