Bitcoin Pushes MicroStrategy Up 113% Since Citigroup Downgrade in December

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by Ibukun Ogundare · 3 min read
Bitcoin Pushes MicroStrategy Up 113% Since Citigroup Downgrade in December
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Despite the fall in BTC price, MicroStrategy CEO remains confident in the company’s constant acquisition of the digital currency.

MicroStrategy Inc (NASDAQ: MSTR) recorded about a 113% increase in its stock since the 8th of December when Citigroup Inc (NYSE: C) downgraded the company’s stock. Over the same period, Citigroup’s stock has dropped from $58.36 to $57.99, recording about a 0.63% decline. Currently, Citigroup is at after-hours trading of 0.03% to $58.01. Citigroup is down nearly 6% in its year-to-date record.

MicroStrategy Performs Strongly Despite Citigroup Downgrade

According to a Cointelegraph report, MicroStrategy’s profitable record over time can be tied to the company’s investment in Bitcoin. MicroStrategy has been investing hugely in Bitcoin, making the top digital asset its treasury reserve asset.

Since MicroStrategy began its BTC acquisition in August 2020, the company has purchased over 70,000 BTC worth over $2.3 billion(at current prices).

MicroStrategy announced on the 9th of December that the company secured $550 million in capital through convertible bonds. The company said the raised funds would be used for more Bitcoin investment. MicroStrategy said:

“MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending the identification of working capital needs and other general corporate purposes.”

MicroStrategy’s statement is said to trigger Citigroup’s move to downgrade the company. Following MicroStrategy revealed plans to invest the net proceeds from the convertible bonds in BTC, Citigroup analyst Tyler Radke rated MSTR a “sell” from “neutral.” Radke said that MicroStrategy’s CEO Michael Saylor has a “disproportionate focus on bitcoin.” Hence, he said the CEO’s decision puts investors at risk. Radke noted:

“MSTR’s bitcoin investment has returned $250M (or worth $26/share or +20% towards stock) since August ’20. While impressive, it pales in comparison to the 172% return in the stock. At the current stock price, our analysis suggests that the market is pricing in much more optimistic valuation scenarios for the core business and Bitcoin.”

Notably, Bitcoin surged more than 100% in December, climbing from $18,319 to about $42,000. As the king coin increases, MSTR is poised to further growth. At press time, Bitcoin is trading at $33,612.24.

MicroStrategy to Acquire More BTC

Despite the fall in BTC price, Saylor remains confident in the company’s constant acquisition of the digital currency. In the company’s financial report for 2020 Q4, the CEO noted that MicroStrategy would continue to hold its acquired BTC. Saylor also said the company would continue to invest excess cash flow in Bitcoin. He added:

“Additionally, we will explore various approaches to acquire additional Bitcoin as part of our overall corporate strategy.”

Data by MarketWatch revealed that MSTR has advanced by 306.04% over the past year and 58.88% in its year-to-date record. The company also increased 269.49% in the last three months and 58.88% over the past month. In the last five days, MicroStrategy stock has jumped by nearly 7%.

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