Just recently, Brent Thrill, a financial analyst from the financial service provider Jefferies, declassified Microstrategy as a company, all the way from ‘hold’ to ‘underperform.’
This is not surprising because, as of March 2022, the business intelligence provider owned roughly 29,218 bitcoin. This amount makes Microstrategy one of the largest holders of bitcoin. In fact, even more than Tesla or any other company worldwide.
The Virginia-based company spent about $3,967 billion to acquire most of its bitcoin in 2020. Following the news of bitcoin dipping below $21,000 from the 24th – 27th, MicroStrategy’s stocks dipped over 10% to $237 per share. A quarterly dip of 66%, far outpacing bitcoin’s 59% decline.
With bitcoin’s market cap currently at $27 billion, Microstrategy’s stash is now worth about $2.7 billion. Now, the NASDAQ-listed giant has recorded a whopping $1.3 billion loss.
During the peak of the bitcoin selling pressure in June, there were concerns about the firm’s $205 million leveraged position and the possibility of them receiving a margin call. Concerns and rumors, which they quickly refuted.
Before the Jefferies declassification, however, wall street analysts already expressed concerns and a pessimistic view of the company’s future following the great bitcoin market crash of 2021. As well as all the other subsequent crashes.
In the second quarter of 2022, Stocknews.com evaluated Microstrategy’s shares to ‘sell,’ and on May 9Th, TheStreet downgraded the company’s stock from a rating of “c-” to “d+.”
Microstrategy, however, isn’t the only ‘high-crypto’ company to suffer the effects of the crypto crash. Coinbase and RobinHood, for example, are set to sell off their shares by around 7% per year over the coming years, according to Kenneth B. Worthington, an analyst from JP Morgan.
Microstrategy’s Comments About The Bitcoin Issue
“To reiterate our strategy, we seek to acquire and hold bitcoin over the long term,” said Phong Le, Microstrategy’s president, and CFO, on a May 3 conference call to fortune.com. “We view our bitcoin holdings as long-term holdings, and we do not currently intend to engage in bitcoin sales.”
Supporting Phong Le’s comment, Shirish Jojodia, senior director of treasury and investor relations at Microstrategy, responded to a request for comment by saying that the company has no plans to sell off its holdings and that that decision is backed by all its shareholders. “Microstrategy is insulated from near-term swings because of its ‘robust capital structure.”
Following the comment and at the height of the crypto market collapse, Microstrategy bought another 480 bitcoin worth about $10 million from May 3rd to June 28th for about $20,817, according to a filing with the US Securities and Exchange Commission.
Microstrategy Saylor’s Involvement And The Crash Timeline
Just before Saylor began to buy bitcoin, Microstrategy’s stocks were worth about $123.92. This happened at the end of July 2020, precisely.
A year later, Microstrategy shares climbed and ended the second quarter of 2021 at $1272.94. In the second quarter of 2021, however, the stocks were worth $164.30.
Although the stocks of Microstrategy have dropped massively from its all-time highs, the company’s stock prices are currently no better than they were before Saylor.
