S&P Global Ratings has given Strategy Inc. (NASDAQ: MSTR), formerly known as MicroStrategy, a B- rating. This is the first time a major credit rating agency has rated a financial company specializing in Bitcoin.
S&P’s credit rating carries a stable outlook, reflecting both the company’s growing influence in the world of digital assets and the risks of its non-traditional balance sheet.
S&P cited “high Bitcoin concentration, narrow business focus, weak risk-adjusted capitalization, and low US dollar liquidity” as key weaknesses.
Despite the negative reviews, the stock price rose to $300 on the day of the announcement, but fell to $287 the next day.
Strategy is no ordinary company. What used to be a business intelligence software provider is now a Bitcoin finance company. Rather than using profits to fund operations, the company is raising money through the issuance of stocks and bonds to buy more Bitcoin.
According to company disclosures, Strategy currently holds approximately 640,000 BTC (equivalent to approximately $73 billion), making it the world’s largest public holder of Bitcoin. The company’s software division accounts for a small portion of total revenue and is close to breaking even.
S&P’s decision to rate the company acknowledges Strategy’s growing role in bridging traditional finance and Bitcoin. Saylor called this a milestone and said the company is the first digital asset treasury (DAT) to be rated by a major credit bureau.
AB– Ratings are considered speculative, or what analysts call “junk grades.” This means that although the company can meet its obligations for the time being, it faces significant risks if market conditions worsen.
Simply put, it basically means that the issuer is highly vulnerable to adverse conditions. Although the company’s financial stability is currently stable, it is fragile, and the risk of default could rise sharply if the economy worsens or funding becomes tight.
S&P said the rating reflects the strategy’s heavy reliance on Bitcoin’s value and limited US dollar liquidity. The company’s debt and preferred dividend obligations are denominated in dollars, but the majority of its assets are in Bitcoin. This is a first for S&P and creates what is called an “inherent currency mismatch.”
“Debt maturities, interest on the company’s debt, and dividends on preferred securities must all be paid in dollars, but Strategy primarily holds Bitcoin.” said the agency.
As of mid-2025, the company had pre-tax profits of $8.1 billion, mostly from unrealized gains on its Bitcoin holdings. However, operating cash flow is negative $37 million, and its assets do not generate steady income.
Related: Strategy to post $3.9 billion Bitcoin profit in Q3 2025
Because S&P treats Bitcoin as a highly volatile asset, it subtracts Bitcoin holdings from stocks when calculating capital strength. That’s why analysts are divided on this rating.
Some say Strategy’s core competitive advantage lies in its large Bitcoin treasury. Excluding BTC from capital calculations underestimates a company’s actual net worth and financial flexibility.
In a bullish Bitcoin market, these holdings could easily cover debt and cash management.
Some believe the S&P credit rating report raised concerns that the company’s convertible debt could be putting about an $8 billion burden on its liquidity. About $5 billion of that amount is currently unfunded and will not mature until 2028.
Currently, Saylor’s company has a large stash of Bitcoin relative to its debt, but S&P warns that if the price of Bitcoin spikes, the company may have to release some coins at “significantly reduced prices” or restructure its debt.
In addition, Strategy owes approximately $640 million annually in preferred stock dividends. The company plans to continue raising funds by issuing shares.
It’s possible that the strategy could delay the payment of these dividends, but if that happens, it could mean preferred shareholders have more say on the board or better terms on dividends, which is something the company really wants to avoid.
Despite S&P’s concerns, analysts and investors appear unfazed. Analysts at TD Cowen reaffirmed their rating on Strategy stock as a Buy and set a price target of $620. This means an increase of more than 100% from the recent share price.
They predict that Strategy will hold nearly 900,000 BTC by 2027, representing more than 4% of the total Bitcoin supply. They believe that growing institutional adoption and a more friendly regulatory environment could continue to increase the company’s value.
VanEck’s Matthew Siegel summarized the market view as follows: “The company has been able to service its debt so far, but is vulnerable to shocks.”
Michael Saylor, who founded MicroStrategy in 1989, has become one of Bitcoin’s most outspoken supporters. His long-term goal, he said, is to build a multitrillion-dollar Bitcoin balance sheet and create a new kind of global trust system based on Bitcoin.
Saylor envisions companies, banks, and even governments holding Bitcoin as a reserve asset, allowing them to back financial products from bonds to insurance with Bitcoin rather than fiat currency.
For our supporters, Strategy is paving the way for this transformation. For skeptics, this is a highly leveraged bet on a volatile asset.