MicroStrategy(US:MSTR)2026-02-19 22:18Bitcoin Holdings and Strategy - As of February 13, 2026, the company held approximately 717,131 bitcoins, acquired at an aggregate purchase price of $54.5 billion, with an average purchase price of approximately $76,027 per bitcoin[29]. - The market price of one bitcoin on February 13, 2026, was reported at $68,734, indicating a potential unrealized loss on the company's bitcoin holdings[29]. - The bitcoin acquisition strategy involves using proceeds from capital raising transactions, including offerings of Class A common stock and preferred securities, to acquire bitcoin[31]. - The company actively manages its bitcoin holdings and capital structure to maintain long-term durability, liquidity, and flexibility[35]. - The company evaluates its bitcoin strategy continuously based on market conditions, capital structure, and anticipated cash resource needs[25]. - The capital management strategy focuses on achieving accretive acquisitions of bitcoin while managing cost of capital and financial obligations[37]. - The concentration of assets in bitcoin limits the company's ability to mitigate risks through diversification[122]. - The ability to execute the bitcoin strategy relies heavily on obtaining favorable equity and debt financing[123]. - The company may need to sell bitcoin to satisfy financial obligations if unable to secure timely equity or debt financing[113]. Financial Performance and Risks - For the fiscal year ended December 31, 2025, the unrealized loss on digital assets was $5.40 billion, partially offset by a deferred tax benefit of $1.55 billion[110]. - The fair market value of bitcoin holdings has fluctuated between $65,000 and $120,000 in the past year, indicating high volatility[120]. - The company experienced significant fluctuations in operating results, with quarter-to-quarter comparisons not indicative of future performance[108]. - The company incurred an unrealized gain on digital assets of $3.89 billion for the quarter ended September 30, 2025, highlighting the volatility in bitcoin pricing[128]. - The price of bitcoin has historically been highly volatile, influencing the company's financial results and market price of listed securities[130]. - The company incurred $4.06 billion of cumulative impairment on its bitcoin holdings through December 31, 2024, reflecting the volatility of bitcoin prices[145]. - The company faces enhanced regulatory scrutiny due to its bitcoin strategy and holdings, particularly from the SEC[155]. - The company is subject to significant legal, commercial, regulatory, and technical uncertainties regarding digital assets, which could adversely affect bitcoin's price[133]. Regulatory Environment - The SEC approved the first U.S. spot bitcoin ETPs in January 2024, expanding access through regulated investment vehicles[59]. - Regulatory actions and evolving laws may materially affect the nature of digital asset markets and the company's bitcoin strategy[71]. - The CFTC considers bitcoin a commodity under the Commodity Exchange Act, allowing for broad enforcement against market manipulation[72]. - Regulatory changes reclassifying bitcoin as a security could classify the company as an "investment company," imposing additional regulatory controls[181]. - The regulatory environment for digital assets is evolving, with potential new laws and enforcement actions that could impact the company's ability to hold and transact in bitcoin[159]. Custody and Security Risks - The company faces counterparty risks related to custodians, which could inhibit ownership rights and access to bitcoin holdings[125]. - The company has implemented measures to mitigate counterparty risks but remains vulnerable to potential insolvency of custodians[125]. - The company does not maintain separate insurance for potential bitcoin losses, exposing it to significant risks in case of custodial insolvency[179]. - As of December 31, 2025, custodians maintain commercial insurance coverage of $320 million, $100 million, and over $100 million for bitcoin losses, which is insufficient to cover the entirety of the company's bitcoin holdings[179]. - Security breaches and cyberattacks in the bitcoin ecosystem could lead to a loss of confidence and adversely affect the company's financial condition[174]. Market Dynamics - Bitcoin consistently ranks among the most liquid traded assets globally, with substantial daily trading volume across spot and derivatives markets[58]. - The emergence of stablecoins and government-backed digital currencies could negatively impact bitcoin's price and market position[64]. - A December 2022 study estimated that wash trading averaged over 70% of reported volume on unregulated exchanges, indicating potential manipulation in the bitcoin market[163]. - In 2022, several major participants in the bitcoin ecosystem, including Celsius Network and FTX, filed for bankruptcy, leading to significant declines in bitcoin prices[165]. - The market for bitcoin is highly uncertain, with factors such as institutional demand and public familiarity potentially affecting its price[139]. Company Operations and Structure - The company had a total of 1,539 employees as of December 31, 2025, with 448 based in the United States and 1,091 internationally[98]. - The company completed a 10-for-1 stock split of its class A and class B common stock on August 7, 2024, retroactively adjusting all applicable share information[105]. - The company’s cloud solution for government achieved FedRAMP authorization, ensuring compliance with essential cloud security and data protection standards[82]. - The company offers its analytics platform in both on-premises product licenses and cloud subscriptions, with full support for on-premises licenses ending December 31, 2026[85]. - The company has established strategic partnerships with various third-party vendors, including cloud hosting providers and consulting firms, to extend its platform's reach[87]. Technology and Innovation - The Strategy One platform is designed for medium to large enterprise deployments, delivering real-time insights across web, mobile, and custom applications[80]. - The company’s AI-powered data modeling capabilities accelerate data product creation and enhance performance across workloads[78]. - The integration of AI into enterprise analytics products may incur substantial costs and could result in reputational harm if AI tools produce inaccurate analyses[194]. - The company faces risks related to changes in third-party software or systems, which may require substantial capital investment to maintain software interoperability[200]. - Software errors, bugs, or security vulnerabilities could lead to reduced demand and revenue, as well as potential litigation claims against the company[201]. Compliance and Legal Risks - The company is subject to various privacy and data protection laws, including the GDPR, which imposes significant compliance requirements and potential fines[95]. - Compliance with complex government contracting requirements may expose the company to civil and criminal penalties if not adhered to[212]. - The company has implemented policies to comply with anti-money laundering and sanctions laws, but risks regulatory proceedings if bitcoin is acquired from bad actors[156][157]. - Customer agreements may limit the company's exposure to product liability claims, but these provisions may be unenforceable in certain jurisdictions[202]. - The company's intellectual property is valuable, and any inability to protect it could reduce the value of its offerings and brand[203].