Down US$1 billion, MicroStrategy still all in on Bitcoin. Are you?
MicroStrategy stock has tracked Bitcoin's decline this year after a string of purchases, and it's still buying more of the crypto. That makes the stock a way to bet on a big Bitcoin comeback.
Cloud computing company MicroStrategy (MSTR) is down more than US$1 billion on its investments in Bitcoin, but CEO Michael Saylor isn't giving up. He's buying more.
Most recently the company bought 480 more Bitcoins for an average price of US$20,817 per coin, according to a new company SEC filing. The filing says the purchases, worth roughly US$10 million, were made from May 3 to June 28, but the price suggests they were recent. Bitcoin's price hovered around US$30,000 in May and dropped below US$25K in mid-June. It's now about US$20,100 per coin.
MicroStrategy has purchased an additional 480 bitcoins for ~$10.0 million at an average price of ~$20,817 per #bitcoin. As of 6/28/22 @MicroStrategy holds ~129,699 bitcoins acquired for ~$3.98 billion at an average price of ~$30,664 per bitcoin. $MSTRhttps://t.co/leQYTXn817
— Michael Saylor⚡️ (@saylor) June 29, 2022
MicroStrategy's stock has basically followed Bitcoin's downturn in 2022. The stock fell about 6% today amid news of the latest buys, and it's down 69% so far this year. While a business software development company by trade, its fortunes are now deeply tied to Bitcoin.
Is it a buy at current prices? Yes, if you expect Bitcoin to rally back and you're willing to wait out what many are now calling a crypto winter.
A big Bitcoin believer in charge
Saylor has been a huge booster of Bitcoin. Most recently on his Twitter feed, he picked up on a statement from US SEC chief Gary Gensler and wrote "#Bitcoin is the only investment-grade cryptocurrency."
#Bitcoin is the only investment grade cryptocurrency. https://t.co/5kLqbqovpS
— Michael Saylor⚡️ (@saylor) June 27, 2022
MicroStrategy has been buying Bitcoin for roughly two years, and the crypto bear market has cost it big as Bitcoin prices declined from around US$69,000 last fall to today's level.
With the latest purchase, MicroStrategy says it has purchased about 129,699 Bitcoins at an average price of US$30,664, or about US$3.98 billion. At today's price of about US$20,100, they're worth about US$2.6 billion – a US$1.38 billion loss.
MicroStrategy's market cap sits at just over US$2 billion, so these are substantial sums.
Still, purchasing more at current prices does bring the average price down, so the move makes sense strategically. And as they say, it's not a loss until you take it, and Saylor isn't selling Bitcoin.
Best long-term place for cash
Saylor has told both CNBC and Benzinga recently that he still considers Bitcoin the best long-term buy out there and will keep sweeping MicroStrategy's free cash into it.
He's also dismissed speculation that his company might face a margin call due to debt from the purchases. For now, it seems ready to ride out what's being called a crypto winter.
Is he right about Bitcoin? Time will tell. But he's putting his company where his mouth is.
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