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MicroStrategy (MSTR) Stock Down 10% Following Additional Bitcoin Purchase

| Updated
by Steve Muchoki · 2 min read
MicroStrategy (MSTR) Stock Down 10% Following Additional Bitcoin Purchase
Photo: MicroStrategy / Flickr

MicroStrategy’s BTC acquisition spree is in line with its new corporate policy devised in late 2020. MSTR stock is down.

MicroStrategy Inc (NASDAQ: MSTR) stock went down as much as 10.7% Monday, closing at $583.67, down 9.71%. The stock deepening happened after the software company MicroStrategy revealed that it had purchased an additional 13,005 Bitcoin for $489 million. The news came in tandem with China’s increased crackdown on cryptocurrencies.

The latest round of BTC purchases has brought MicroStrategy Bitcoin’s total holdings to 105,085 units. However, this development was not good tidings to investors as most have become wary of cryptocurrencies, owing to their speculative nature. Additionally, the Chinese government’s stringent rules on cryptocurrencies may have further raised their concerns.

Recently, China’s central bank issued a directive for payment processors and banks to cut down on transactions involving cryptocurrencies. Moreover, a crackdown ensued on the four largest miners of bitcoin in China, with the latest being Sichuan province. Through these actions, the Chinese Authorities hope to curb financial risks associated with the crypto space.

MicroStrategy Stock and Bitcoin Acquisition

MicroStrategy’s BTC acquisition spree is in line with its new corporate policy devised in late 2020. It directs that all cash outside of operations should be held in form of BTC. This made it the first publicly-traded company holding BTC.

At the time BTC was $12,000 and as it rose during Q1 2021, investors flocked into the company, bringing shares to as high as 21.6% in February.

Earlier this month, MicroStrategy spent $500 million raised in junk bonds to purchase more BTC. Additionally, the company made an SEC filing to purchase more Bitcoin with proceeds obtained from the sale of its class A common stock. The company’s BTC acquisition has continued, despite BTC prices maintaining below $40,000 since April, and losing about $63 million following the BTC price drop.

Tying the company’s fate to that of BTC might take the company’s stock and its valuation in either direction, seeing as the crypto market is hugely volatile. This uncertainty has caused unrest among investors, causing the company’s stock to shed 2.48% and 19.44% in 5-days and 3 months respectively.

Nevertheless, MicroStrategy shares are still up over 390% in the past 1 year. Stock records also show gains of 50.22% in YTD and 23.54% in 1 month.

The pro-Bitcoin MicroStrategy CEO Michael Saylor has continued to support Bitcoin endeavors. Recently, he expressed his thrill with El Salvador’s move to place BTC as its legal tender.

In the after-hours session, MicroStrategy stock was exchanging hands at $577.00, a 1.14% fall from its yesterday’s closing price.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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