NEW YORK, May 18, 2025 (GLOBE NEWSWIRE) -- Pomerantz LLP announces that a class action lawsuit has been filed against MicroStrategy Incorporated d/b/a Strategy (“Strategy” or the “Company”) (NASDAQ: MSTR) and certain officers. The class action, filed in the United States District Court for the Eastern District of Virginia, and docketed under 25-cv-00861, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Strategy securities between April 30, 2024 and April 4, 2025, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are an investor who purchased or otherwise acquired Strategy securities during the Class Period, you have until July 15, 2025 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
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Strategy, together with its subsidiaries, provides enterprise analytics software and services purportedly powered by artificial intelligence. Since 2020, the Company has increasingly focused on purchasing and holding bitcoin, a type of crypto-currency, as a long-term business strategy. In October 2023, this strategy became so central to the Company’s operations that it began referring to itself as a “Bitcoin Treasury Company” that primarily uses proceeds from equity and debt financings, as well as cash flows from its operations, to accumulate bitcoin, which serves as its primary treasury reserve asset.
Throughout the Class Period, Defendants consistently touted Strategy’s bitcoin-focused investment strategy and treasury operations. The Company also introduced several new key performance indicators (“KPIs”)—namely, “BTC Yield,” “BTC Gain,” and “BTC $ Gain”—to measure its financial results. According to Defendants, these new KPIs would help the market assess the Company’s strategy of acquiring bitcoin in a manner accretive to shareholders.
On January 1, 2025, Strategy adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires publicly traded companies to measure their crypto assets at fair value in their financial statements, with gains and losses from changes in the fair value of those assets recognized in net income in each reporting period. The FASB issued ASU 2023-08 to improve the way that companies account for their crypto assets and, accordingly, require them to provide a more accurate assessment of the fair value of those assets.
Prior to its adoption of ASU 2023-08, rather than employing a fair value accounting methodology, Strategy accounted for its bitcoin under a cost-less-impairment accounting model, whereby the Company classified its large bitcoin holdings as intangible assets. Under this accounting model, Strategy only needed to recognize impairments in the event of price depreciations and would not mark up for price increases unless the assets were sold.
While Defendants advised investors throughout the Class Period that they expected Strategy’s adoption of ASU 2023-08 to materially impact its financial statements, Defendants failed to disclose the particular nature or scope of the expected impact while downplaying the attendant risks. Indeed, Defendants consistently provided rosy assessments of Strategy’s performance as a bitcoin treasury company following its adoption of ASU 2023-08. They did this, in part, by reporting and projecting positive BTC Yield, BTC Gain, and BTC $ Gain results, while omitting the immense losses the Company could realize on its bitcoin assets after accounting for these assets under a fair value accounting methodology.
The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding Strategy’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the anticipated profitability of the Company’s bitcoin-focused investment strategy and treasury operations was overstated; (ii) the various risks associated with bitcoin’s volatility and the magnitude of losses Strategy could recognize on the value of its digital assets following its adoption of ASU 2023-08 were understated; and (iii) as a result, Defendants’ public statements were materially false and misleading at all relevant times.
On April 7, 2025, Strategy disclosed in a filing with the United States Securities and Exchange Commission that, following its adoption of ASU 2023-08, it recognized a $5.91 billion unrealized loss on its digital assets for the first quarter of 2025, which was expected to result in a net loss for the quarter. As a result, Strategy warned investors that “[w]e may not be able to regain profitability in future periods, particularly if we incur significant unrealized losses related to our digital assets.”
On this news, Strategy’s Class A common stock price fell $25.47 per share, or 8.67%, to close at $268.14 per share on April 7, 2025.
Then, on May 1, 2025, Strategy issued a press release announcing its financial results for the first quarter of 2025. Therein, the Company confirmed that it had recorded an unrealized fair value loss on digital assets of approximately $5.9 billion during the quarter. On a subsequent earnings call to discuss these results, Company management explained that this loss stemmed from applying a fair value accounting methodology to Strategy’s bitcoin assets following bitcoin’s steep depreciation in value in the first quarter of 2025.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
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CONTACT:
Danielle Peyton
Pomerantz LLP
dpeyton@pomlaw.com
646-581-9980 ext. 7980
