MicroStrategy NYSE: MSTR Did Not Surprise Again

MicroStrategy Incorporated (NYSE: MSTR) is an American development company that provides business intelligence (BI), mobile software, and cloud-based services. Its primary business analytics competitors include SAP AG Business Objects, IBM Cognos, and Oracle Corporation’s BI Platform.

MicroStrategy issued $1.75 billion worth of stock and bought Bitcoin with that amount. To date, the company holds 331,200 bitcoins, making it the largest global bitcoin holder. About 1.5% of all bitcoins in circulation belong to this company. The company’s value has increased sixfold this year, reaching $78 billion. As of November 18, 2024, one share of the company is trading at $384.79. The company’s value is more than 2.6 times the total value of bitcoins on its balance sheet.

Currently, the company is in an extremely risky position for investors. In the short term, it might be great for investment, as demand for the company will increase as long as cryptocurrency values rise. However, we should remember that since the company’s value is 2.6 times more than the bitcoins on its balance sheet, when we buy the stock of this company, we are effectively getting at least 2x leveraged Bitcoins. When Bitcoin starts to fall, the shares of this company will likely fall at least twice as much. When I feel that day has arrived, I will be ready to open a short trade in the company’s stock.