Should You Buy, Sell, or Hold MSTR Stock Before Q2 Earnings?

Core Insights - MicroStrategy (MSTR) is set to report its second-quarter 2025 results on July 31, with expected revenues of $112.15 million, reflecting a year-over-year growth of 0.64% and a projected loss of 12 cents per share, unchanged over the past 30 days [1][9] Group 1: Bitcoin Holdings and Acquisitions - MicroStrategy is the world's largest bitcoin treasury company, holding 607,770 Bitcoins as of July 20, 2025, with recent acquisitions of 6,220 Bitcoins for $739.8 million and 10,100 Bitcoins for $1.05 billion [3][9] - The company is expected to benefit from the Trump administration's announcement regarding a strategic bitcoin reserve, contributing to the increasing acceptance of bitcoin as a non-sovereign asset [4] Group 2: Financial Performance and Projections - The bitcoin yield for MicroStrategy was 13.7% year-to-date as of April 28, 2025, with a full-year target of 25% and a bitcoin dollar gain target of $15 billion, having reported gains of $4.1 billion in Q1 2025 and $5.8 billion as of April 28, 2025 [5] - Software subscription revenues surged 62% year-over-year to $37.1 million, accounting for 33% of total revenues in Q1 2025, with subscription billings growing 38% year-over-year to $24.5 million [6] Group 3: Stock Performance and Valuation - MicroStrategy shares have returned 39.4% year-to-date, outperforming the Zacks Computer & Technology sector's return of 11.3% and the Zacks Computer Software industry's 19.4% [7] - The company's current valuation is considered stretched, with a Price/Book ratio of 3.43X, higher than MARA Digital's 1.62X and Riot Platform's 1.76X [11] Group 4: Regulatory Environment and Future Plans - The passing of the GENIUS Act on July 17 provides a favorable legal background for stablecoins, which, along with other pending regulations, is expected to benefit MicroStrategy despite bitcoin's volatility [16] - The company plans to raise $42 billion through equity issuance and $42 billion through fixed income securities by the end of 2027, with $21.1 billion in equity and $35.6 billion in fixed income securities remaining to be issued [18] Group 5: AI and Cloud Services Expansion - MicroStrategy is expanding its AI capabilities with the launch of Mosaic, an AI-powered Universal Intelligence Layer, aligning with its shift toward cloud-first, subscription-based services [19]