MicroStrategy Faces Share Drop Amid Aggressive Bitcoin Strategy
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Market Reaction to Bitcoin Acquisition
MicroStrategy revealed the purchase just before the Nasdaq trading day began. Within an hour, MSTR shares fell 5.3%, dropping from $318.89 to $302.09. Although the stock partially recovered during the session, it closed at $302.96 and declined another 3.19% in after-hours trading, settling at $293.59.
The acquisition was funded by selling 592,987 shares earlier in the week, marking the company’s eighth consecutive week of Bitcoin purchases. Since October 31, MicroStrategy has steadily increased its holdings, adding 194,180 BTC to its reserves.
Leveraged Strategy Raises Eyebrows
Analysts express concern over MicroStrategy’s strategy of using convertible notes and debt issuances to fund its Bitcoin buying spree. The Kobeissi Letter pointed out that the firm’s plans to increase authorized shares by $10 billion add to the risks.
Despite a 20.18% decline in MSTR’s stock price over the past month, it remains up 342.15% since January 1. However, some experts, including Hartmann Capital founder Felix Hartmann, warn of potential volatility. Hartmann speculated that MicroStrategy could rise to a top 5 company by market cap before possibly facing financial collapse.
Hyperbitcoinization or Overleveraged Risk?
Joe Burnett, head of market research at Unchained, described MicroStrategy’s approach as "hyperbitcoinization," leveraging its premium stock valuation to acquire more Bitcoin and reduce debt. While the strategy aims to increase Bitcoin-per-share value, critics caution that the high-risk approach could backfire.