Strategy (NASDAQ: MSTR) stock climbed $4,78 (1,20%) from its latest closing price of $399.80 to its Monday price of $404,58 as the company revealed that a class-action lawsuit is targeting it.
Although most investors became aware of the legal action while reading the firm’s latest Bitcoin purchase disclosure, the company running the lawsuit, Pomerantz, disclosed and detailed it on Sunday, May 18.
Some MSTR shareholders are displeased with the firm’s accounting practices and feel they have suffered losses as a result of improper risk statements:
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.
The lawsuit also heavily relies on the newly adopted ‘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”).’
In summary, suing investors allege that Michael Saylor’s company offered severely misleading data on the performance of its Bitcoin (BTC) strategy. According to Pomerantz’s press release, the inciting incident was the April 7, 2025, $5.91 billion loss disclosure that triggered a rapid 8.67% MSTR stock price drop.
While it is not known at press time how much money the plaintiffs are demanding, Strategy expressed its intent to fight vigorously.
Why MSTR investors are yet to price in the lawsuit
Elsewhere, it is doubtful if MSTR investors have priced in the class action lawsuit. To begin with, following an initial 2% drop in the Monday pre-market, the equity entered a rapid rally immediately after the morning bell.
What makes the upswing even stranger is that there has been no shortage of adverse economic news in the second half of May. A major cause for investor anxiety came from Moody’s, which downgraded the U.S. credit rating, thus turbocharging the already-rising 30-year treasury yield.
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