MicroStrategy Continues to Expand its Bitcoin Holdings
In July, MicroStrategy founder Michael Saylor revealed that the company acquired an additional 169 BTC for $11.4 million. This purchase brings the firm’s total BTC holdings to 226,500. Despite facing impairment losses due to BTC price fluctuations, MicroStrategy remained focused on its bitcoin acquisition strategy. As the world’s largest corporate holder of BTC, the company now possesses $14.6 billion worth of the cryptocurrency at current spot prices.
Financial Performance and Bitcoin Yield KPI
In the second quarter, MicroStrategy reported total revenues of $111.4 million, a slight decrease from the previous quarter and below analysts’ expectations. Despite this, the company’s gross profit reached $80.5 million. The carrying value of MicroStrategy’s BTC holdings is currently at $5.68 billion, with cumulative impairment losses of $2.64 billion. However, the original cost basis for the BTC holdings was $8.33 billion, with an average cost per bitcoin of $36,798.
MicroStrategy President and CEO Phong Le emphasized the firm’s commitment to its Bitcoin development strategy. He introduced a new Key Performance Indicator (KPI) called ‘BTC Yield,’ aiming for an annual yield of 4-8% over the next three years.
The BTC Yield KPI compares the company’s BTC holdings to its potential total shares outstanding, including convertible notes, stock options, and other equity awards. The goal is to assess the performance of MicroStrategy’s bitcoin strategy in a shareholder-friendly manner. The company has achieved a 12.2% Bitcoin Yield year-to-date in 2024 and targets a 4-8% annual yield for the years 2025-2027.
Equity Offering and Stock Split
MicroStrategy raised $800 million through convertible senior notes due 2032 and redeemed $650 million convertible senior notes due 2025. Additionally, the company announced a new $2 billion at-the-market equity offering program. This move is part of MicroStrategy’s efforts to manage its equity capital efficiently.
In a separate development, MicroStrategy plans to undergo a 10-for-1 stock split, making it more accessible for smaller investors to acquire company shares. Following this announcement, MicroStrategy shares (MSTR) experienced a 6% decline, dropping below $1,500. However, the stock price recovered and settled at $1,569 in after-hours trading.
These strategic initiatives underline MicroStrategy’s commitment to expanding its bitcoin holdings and optimizing its financial performance through innovative KPIs and equity offerings.
Hot Take: MicroStrategy’s Bitcoin Bet Pays Off
MicroStrategy’s latest financial results demonstrate the company’s bullish stance on Bitcoin and its potential for long-term growth. By increasing its BTC holdings and introducing novel KPIs to track performance, MicroStrategy aims to maximize shareholder value and capitalize on the evolving cryptocurrency market. The equity offering and stock split further reflect the company’s proactive approach to financial management and investment strategies. As MicroStrategy continues to navigate the crypto landscape, investors will be closely watching how these decisions impact the company’s future growth and profitability.
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