Pomerantz Law Firm Announces the Filing of a Class Action Against MicroStrategy Incorporated d/b/a Strategy and Certain Officers

Core Viewpoint - A class action lawsuit has been filed against MicroStrategy Incorporated and certain officers for alleged violations of federal securities laws during the Class Period from April 30, 2024, to April 4, 2025, seeking damages for misleading statements regarding the company's bitcoin-focused investment strategy and its financial implications [1][9]. Company Overview - MicroStrategy, along with its subsidiaries, provides enterprise analytics software and services, increasingly focusing on bitcoin as a long-term business strategy since 2020, referring to itself as a "Bitcoin Treasury Company" [4]. - The company utilizes proceeds from equity and debt financing, as well as operational cash flows, to accumulate bitcoin, which serves as its primary treasury reserve asset [4]. Financial Reporting and Accounting Changes - On January 1, 2025, MicroStrategy adopted the FASB's Accounting Standards Update No. 2023-08, requiring the measurement of crypto assets at fair value, with gains and losses recognized in net income [6]. - Prior to this, the company used a cost-less-impairment accounting model, only recognizing impairments during price depreciations without marking up for price increases unless assets were sold [7]. Misleading Statements and Allegations - Throughout the Class Period, the company allegedly made materially false and misleading statements regarding its business and operations, overstating the anticipated profitability of its bitcoin-focused strategy and understating the risks associated with bitcoin's volatility [9]. - Defendants reportedly provided optimistic assessments of the company's performance while omitting significant potential losses that could arise from the fair value accounting methodology [8]. Financial Impact and Stock Performance - On April 7, 2025, MicroStrategy disclosed a $5.91 billion unrealized loss on its digital assets for Q1 2025, leading to a significant drop in its Class A common stock price by $25.47 per share, or 8.67%, closing at $268.14 [10]. - The company confirmed this loss in a press release on May 1, 2025, attributing it to the application of fair value accounting following a steep depreciation in bitcoin's value [11].