Strategy Reports $2.8B Q3 Profit as Bitcoin Holdings Drive Strong Performance

• Strategy reported Q3 net income of $2.8B, far surpassing Wall Street expectations.

• Diluted EPS came in at $8.42, signalling strong profitability and operational recovery.

Strategy shares soared almost 6% in after-hours trading as the company announced its third-quarter earnings on Thursday evening. The Bitcoin treasury company announced that it earned a net income of $2.8 billion in the third quarter that ended on September 30, which is far beyond the expectations of Wall Street.

The diluted earnings per share were $8.42, which is well above the analyst expectations of $8.15, and it indicates that the company is financially healthy.

The quarterly profit is a sharp reversal of the loss of $340.2 million that Strategy incurred last year. The figure, however, represents a drop in the record-breaking net income of the company of $10 billion in the second quarter.

Bitcoin Holdings Fuel Quarterly Gains

Strategy holds the biggest Bitcoin holdings among publicly-traded corporations, with much of its quarterly achievements being fuelled by cryptocurrency appreciation. The 6.5% price growth of Bitcoin during the quarter of the year was a significant boost to the balance sheet and financial performance of Strategy.

The company has continued to pursue its strategy by aggressively expanding its holdings by purchasing 42,706 Bitcoin in the third quarter. Strategy had a total of 640,031 Bitcoin under its holdings by September 30, and additional purchases increased the number to 640,808 by Sunday.

The average cost of acquisition in the firm is $74,032 per Bitcoin, which places the firm in a good position considering the prevailing market prices of approximately $108,500.

The Bitcoin yield of the strategy reached 26% year-to-date, bringing about $13 billion in gains and strengthening its treasury management strategy. The management reinstated full-year projections of 30% Bitcoin yield and $24 billion net income, assuming that Bitcoin would hit $150,000.

Even though the recent volatility has been unstable, as Bitcoin is down 1.7% in 24 hours, Strategy is confident in the long-term outlook. The company shares ended the trading day on Thursday at $254.57, or more than 7.5% lower, and this was the lowest point in six months before the company regained its footing in after-hours trade.

The stock shot up to more than $269 after the earnings announcement, indicating that investors were once again confident in the Bitcoin-focused business model of Strategy. The mNAV ratio of the company narrowed to 1.05x in comparison to the high of 3.89x in November during the recent price corrections in both Bitcoin and Strategy stock.

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