Adds analyst quote in paragraph 10, updates prices
Strategy slashes 2025 earnings forecast due to bitcoin slump
Bitcoin falls below $90,000
Strategy sets $1.44 billion reserve for dividends amid market volatility
By Pritam Biswas and Hannah Lang
Dec 1 (Reuters) - Strategy MSTR.O slashed its earnings forecast for 2025 on Monday, citing a weak run in bitcoin, the world's largest cryptocurrency, and announced plans to create a reserve to support dividend payments.
Shares of the largest corporate holder of bitcoin slumped about 8% in afternoon trade.
Bitcoin dropped below $90,000 on Monday as a selloff deepened. The cryptocurrency had shed more than $18,000 in November, marking its steepest monthly fall since mid-2021 amid renewed risk aversion.
"Bitcoin's ongoing slump has been a disaster for Strategy, as the stock hits fresh one-year lows," said Chris Beauchamp, chief market analyst at IG Group.
"Many had hoped that the lows last week in bitcoin would mark a recovery for the stock, but while the cryptocurrency is still above the November low, the selling appears to be intensifying as the afternoon goes on."
Shares of firms holding bitcoin and other tokens on their balance sheets have been under pressure following the latest volatility in the crypto market.
Strategy said it now expected between a profit of $6.3 billion and a loss of $5.5 billion for the full year, compared to its previous forecast of a net profit of $24 billion.
The prior estimate, published on October 30, assumed a bitcoin price of $150,000 as of December 31, the company said.
Separately, Strategy said it had set up a $1.44 billion reserve to fund dividends on preferred stock and interest on outstanding debt.
"I think that the idea of establishing a USD reserve is prudent and also helps to address some of the questions that had been out there about how the company would ultimately make these [dividend] payments," said Mark Palmer, an analyst at Benchmark.
The reserve, which is set to ultimately cover dividend payments for two years, will position the company better to "navigate short-term market volatility", Michael Saylor, founder and executive chairman, said in a statement.
Strategy said it held 650,000 bitcoins, equal to about 3.1% of the total 21 million that will ever exist.
(Reporting by Pritam Biswas in Bengaluru; Editing by Anil D'Silva and Sriraj Kalluvila)
((Pritam.Biswas@thomsonreuters.com;))
