MicroStrategy hit lowest since 2020 after revealing sale

MICROSTRATEGY shares touched the lowest level since August 2020 after the enterprise-software firm, better known in recent years as the largest corporate buyer of Bitcoin, disclosed its first ever sale of the token.

The stock fell 1.1 per cent to US$136.63 on Thursday (Dec 29) and is down 75 per cent this year. Bitcoin rose less than 1 per cent to around US$16,590, though it has slumped 64 per cent since the start of the year.

In a filing Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the start of November and Dec 21 through its MacroStrategy subsidiary, paying roughly US$42.8 million in cash. It then sold 704 of the tokens on Dec 22 for a total of around US$11.8 million, citing tax purposes, before buying 810 more of them two days later.

“Investors seem to be concerned about their announcement that they’re still a net buyer of crypto,” said Matt Maley, chief market strategist for Miller Tabak + Co. “Most people have been hoping that MSTR might scale back their holdings after Michael Saylor stepped down as CEO. This news means they don’t seem to want to do that anytime soon.”

All in, MicroStrategy held about 132,500 Bitcoin worth more than US$4 billion as of Dec 27. The firm paid an average purchase price of US$30,397 per Bitcoin.

“Given MicroStrategy’s US$2.4 billion in leverage, we believe the company may have too much leverage for Bitcoin and could face some liquidity risk,” Jefferies analyst Brent Thill wrote in a note on Wednesday. Thill has an “underperform” rating on the shares and a target price of US$110.

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MicroStrategy had over the pandemic years become well known for its Bitcoin acquisitions, led largely by Saylor. Earlier this year Saylor relinquished that role and now serves as executive chairman at the firm and still leading its Bitcoin strategy.

MicroStrategy traded at around US$120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of US$1,315 in February 2021. BLOOMBERG