Down $1 billion, MicroStrategy still all in on Bitcoin. Are you?

Posted: 29 June 2022 5:15 pm

MicroStrategy stock has tracked Bitcoin’s decline this year after a string of purchases, and it’s still buying more of the crypto. That makes the stock a way to bet on a big Bitcoin comeback.

Cloud computing company MicroStrategy (MSTR) is down more than $1 billion on its investments in Bitcoin, but CEO Michael Saylor isn’t giving up. He’s buying more.

Most recently the company bought 480 more Bitcoins for an average price of $20,817 per coin, according to a new company SEC filing. The filing says the purchases, worth roughly $10 million, were made from May 3 to June 28, but the price suggests they were recent. Bitcoin’s price hovered around $30,000 in May and dropped below $25K in mid-June. It’s now about $20,100 per coin.

MicroStrategy’s stock has basically followed Bitcoin’s downturn in 2022. The stock fell about 6% today amid news of the latest buys, and it’s down 69% so far this year. While a business software development company by trade, its fortunes are now deeply tied to Bitcoin.

Is it a buy at current prices? Yes, if you expect Bitcoin to rally back and you’re willing to wait out what many are now calling a crypto winter.

A big Bitcoin believer in charge

Saylor has been a huge booster of Bitcoin. Most recently on his Twitter feed, he picked up on a statement from SEC chief Gary Gensler and wrote “#Bitcoin is the only investment grade cryptocurrency.”

MicroStrategy has been buying Bitcoin for roughly two years, and the crypto bear market has cost it big as Bitcoin prices declined from around $69,000 last fall to today’s level.

With the latest purchase, MicroStrategy says it has purchased about 129,699 Bitcoins at an average price of $30,664, or about $3.98 billion. At today’s price of about $20,100, they’re worth about $2.6 billion – a $1.38 billion loss.

MicroStrategy’s market cap sits just over $2 billion, so these are substantial sums.

Still, purchasing more at current prices does bring the average price down, so the move makes sense strategically. And as they say, it’s not a loss until you take it, and Saylor isn’t selling Bitcoin.

Best long-term place for cash

Saylor has told both CNBC and Benzinga recently that he still considers Bitcoin the best long-term buy out there and will keep sweeping MicroStrategy’s free cash into it.

He’s also dismissed speculation that his company might face a margin call due to debt from the purchases. For now it seems ready to ride out what’s being called a crypto winter.

Is he right about Bitcoin? Time will tell. But he’s putting his company where his mouth is.

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