Michael Saylor’s strategy has received a ‘B-‘ junk rating from S&P Global Ratings. The rating, deemed speculative grade, highlights the company’s considerable exposure to Bitcoin alongside its restricted business diversification. The firm, previously recognized as MicroStrategy, has transitioned from a software provider to a Bitcoin holding entity, utilizing capital from equity and debt issuance to acquire and retain the cryptocurrency. S&P highlighted that the company’s balance sheet is significantly dependent on Bitcoin, rendering it vulnerable to market fluctuations and shifts in regulations. This concentration is viewed as a dual-edged sword, embodying both strength and vulnerability. Bitcoin price trends are currently under close observation as market dynamics shift.
As of mid-2025, Strategy possessed around $70 billion in Bitcoin, alongside convertible debt obligations nearing $8 billion that are set to mature from 2028 onward. S&P highlighted the significance of the company’s capacity to navigate these debt maturities via capital market access, which plays a crucial role in its stable outlook. Analysts pointed out a structural mismatch in Strategy’s financials, noting that debts are denominated in US dollars while the majority of assets are held in Bitcoin. The adjusted capital position of the company continues to show a significant negative trend, largely driven by the volatility and non-yielding characteristics of Bitcoin, impacting its risk-adjusted capital ratio.
Despite a slightly profitable core software business, Strategy disclosed a negative $37 million in cash flow from operations during the first half of 2025. The company’s pre-tax earnings of $8.1 billion were primarily driven by gains in Bitcoin prices. S&P recognized the company’s robust market capitalization of approximately $80 billion, highlighting investor enthusiasm for Bitcoin exposure via conventional securities. Nonetheless, cybersecurity continues to be a pressing issue, as any custodial mishap or loss of private keys could significantly affect liquidity.
Despite the company’s effective management of its debt, including refinancing obligations via convertible debt and equity issuance, it continues to face liquidity challenges. Preferred equity dividends surpass $640 million each year; however, postponing these payments may result in governance challenges. S&P indicated that an upgrade appears improbable in the coming year unless Strategy enhances its dollar liquidity and diminishes its dependence on convertible debt. On the flip side, a downgrade might be prompted by a loss of market access or substantial declines in Bitcoin prices.