Since MicroStrategy didn’t adopt the digital asset fair accounting standard, it led to reporting losses during Q1 2024. In April, MicroStrategy announced the purchase of additional 122 BTC.
By Bhushan Akolkar
Edited by Julia Sakovich
Updated
3 mins read
MicroStrategy, the world’s biggest corporate holder of Bitcoins, reported its Q1 2024 results on Monday, April 29, with a net loss of $53 million. For the first quarter, the company revealed a $191.6 million digital asset impairment loss, jumping 10x in the same period a year before.
In comparison to Q1 2023, the revenue generated by MicroStrategy for Q1 2024, also dropped by 5.5%, reaching $11.52 million. On the other hand, the company hasn’t yet adopted the new digital asset fair value accounting standard, which otherwise would have considered the 65% surge in BTC price during Q1 2024.
As a result, MicroStrategy’s carrying value of BTC holdings stood at $5.07 million at a price of $23,680 per Bitcoin, as per the traditional method, With new accounting standards and a fair value approach, this could be $15.2 billion.
As per Benchmark’s research note last week, numerous companies that possess Bitcoin have chosen to adopt the new ASU 2023-08 guidance early. To qualify for potential inclusion in the S&P 500 by the index committee, a company must demonstrate positive earnings in its latest quarter. However, MicroStrategy missed this chance while reporting net losses during Q1 2024.
In an announcement on Monday, MicroStrategy Executive Chairman Michael Saylor announced that the company purchased an additional 122 Bitcoin worth $7.8 million in April. This takes the company’s total BTC holdings count to 214,000 Bitcoins, now valued at $$13.5 billion, purchased at an average price of $35,180.
In April, @MicroStrategy acquired an additional 122 BTC for $7.8 million and now holds 214,400 BTC. Please join us at 5pm ET as we discuss our Q1 2024 financial results and answer questions about the outlook for #BusinessIntelligence and #Bitcoin. $MSTR https://t.co/h40yyrgEb0
— Michael Saylor⚡️ (@saylor) April 29, 2024
Speaking on the development, Phong Le, President and Chief Executive Officer at MicroStrategy, said:
“In the first quarter we raised over $1.5 billion by executing again on our capital markets strategy including two successful convertible debt offerings. We acquired 25,250 additional bitcoins since the end of the fourth quarter, our 14th consecutive quarter of adding more Bitcoins to our balance sheet. We believe that the combination of our operating structure, bitcoin strategy, and focus on technology innovation provides a unique opportunity for value creation for our shareholders.”
MicroStrategy (MSTR) saw a 3.3% decline in its stock during after-hours trading following the announcement. The substantial 65% surge in Bitcoin triggered an exceptional rally for MicroStrategy in the first quarter, with its stock skyrocketing over 170% to reach $1704 by March’s end. However, MicroStrategy’s stock has since retreated to $1,292.
If the inclusion of MicroStrategy into the S&P 500 had happened, the MSTR would have resumed the rally again to $1,800.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
