By
Chimamanda U. Martha
April 24th, 2024
MicroStrategy chief Michael Saylor said that the fair value accounting measures by FASB would make it easy for crypto firms to report their losses and gains.
On Tuesday, November 1, business intelligence firm MicroStrategy (NASDAQ: MSTR) reported its third-quarter earnings for the year, the company reported $700,000 impairment losses on its Bitcoin holdings.
This was down significantly from the $917 million impairment loss in the previous quarter. The impairment reflects the drop in the price of Bitcoin vs the price at which the company acquired its BTC.
During the last quarter, Phong Le took over as the CEO of MicroStrategy. Michael Saylor became the executive chairman and has been focusing full-time on the company’s Bitcoin strategy. Also, between August 2 and September 19, the company purchased an additional $6 million worth of Bitcoins. With this, the company’s total Bitcoin holdings have moved past 130,000. MicroStrategy CFO Andrew Kang said:
“We incurred a minimal bitcoin impairment charge as bitcoin prices were stable during the third quarter, and were encouraged by FASB’s recent announcement of its support for fair value accounting for bitcoin”.
MicroStrategy said that it would be supporting the fair value accounting measures by FASB which would allow companies to report losses and gains immediately. Kang said that such a change would “promote additional institutional adoption of bitcoin as an asset class”.
Curing Wednesday’s conference call, MicroStrategy Executive Chairman Michael Saylor also echoed similar calls. “It doesn’t mean that we have enough guidance to change our accounting,” though when considering the next steps, “we know we have unanimous support to adopt fair value accounting for bitcoin,” he added.
So far, MicroStrategy has invested a total of $4 billion in its Bitcoin purchases. The value of the same has now dropped to $2.5 billion amid the crypto market correction. The average cost per bitcoin of purchase for Microstrategy is approximately $30,639.
MicroStrategy Q3 Numbers: Losses and Gains
Apart from its Bitcoin story, the business intelligence firm reported revenue of $125.4 million for the third quarter. This was short of analysts’ expectations of $127.2 million. Also, the adjusted earnings registered a loss of 96 cents a share against the analyst’s expectations of 15 cents loss.
Product licenses and subscription services revenues saw a jump of 5.5% at $38.7 million during Q3 2022. After the results, the MSTR stock price gained 1.48%. As of Tuesday’s closing, MSTR is trading at a price of $257. It has corrected 51% year-to-date in line with the Bitcoin price correction this year.