MicroStrategy Reports First Quarter 2024 Earnings
In its first-quarter 2024 earnings report, MicroStrategy, the business intelligence software company with significant bitcoin holdings, reported a larger-than-expected loss and missed revenue estimates.
Key Points from the Earnings Report
- The company posted a loss of $3.09 per share on revenue of $115.2 million, below analysts’ expectations.
- The shortfall was mainly due to a $191.6 million impairment charge on its bitcoin holdings.
- MicroStrategy’s financial performance is overshadowed by its significant investment in bitcoin.
- Currently holding 214,400 bitcoins at an average purchase price of $35,180.
- Despite the financial setback, the company remains committed to its bitcoin acquisition strategy.
MicroStrategy’s Bitcoin Holdings
Under the leadership of co-founder Michael Saylor, MicroStrategy has become the largest corporate holder of bitcoin. It holds 214,400 bitcoins, representing over 1% of all tokens in circulation, acquired at an average price of $35,180. At current prices, this investment is valued at approximately $13.3 billion.
Accounting Challenges
- The first-quarter loss was primarily due to a $191.6 million impairment charge on its digital asset holdings.
- Current accounting rules require cryptocurrencies to be recorded as “intangible assets.”
- New accounting guidance is needed for reporting crypto gains and losses similar to traditional financial assets.
Commitment to Bitcoin Strategy
Despite the stock price decline after the earnings report, MicroStrategy remains steadfast in its bitcoin acquisition strategy. During the earnings call, Saylor expressed confidence in bitcoin’s long-term potential as an institutional asset class. He highlighted the recent approval of spot bitcoin ETFs in the U.S. as a significant development.
Analyst’s Perspective
Canaccord Genuity lowered its price target on MicroStrategy stock following the earnings report but maintained a “buy” rating. The firm noted that MicroStrategy raised over $1.5 billion in the first quarter and used the funds to acquire more bitcoins, bringing its total holdings to 214,400 bitcoins valued at around $13.6 billion.
Hot Take: MicroStrategy’s Bitcoin Bet
MicroStrategy’s first-quarter earnings report reflects the company’s significant investment in bitcoin and its commitment to the cryptocurrency despite financial challenges. The company’s focus on expanding its bitcoin holdings and belief in the long-term potential of the digital asset underscore its strategy as a key player in the institutional adoption of cryptocurrencies.
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