MicroStrategy faced a significant decline in its stock value, dropping over 8% after announcing a $209 million Bitcoin purchase. The company’s move raised concerns among market observers about its reliance on leverage. The share price fell markedly shortly after the Nasdaq opened, declining from $318.89 to $302.09 within an hour. Despite some recovery, MicroStrategy’s stock ended the day at $302.96 and slipped further in after-hours trading to $293.59.
The acquisition was financed by selling 592,987 shares during the same week, marking the eighth consecutive week of Bitcoin purchases by the business intelligence firm. Since October 31, MicroStrategy has accumulated 194,180 BTC. There is growing apprehension regarding the company’s plans to significantly increase its authorized shares, potentially from 330 million to 10.33 billion. Analysts suggest this strategy has led MicroStrategy into a precarious situation, as its stock has declined more than 20% in the past 30 days but has soared 342.15% since January 1.
Opinions vary on the company’s future. While some predict eventual financial trouble, others think it could thrive in a bullish Bitcoin market by leveraging further. MicroStrategy’s strategy, referred to as “hyperbitcoinization,” involves using a stock price premium to acquire more Bitcoin, thereby enhancing Bitcoin-per-share while managing leverage. This approach has allowed the company to periodically boost its Bitcoin holdings. Recently, MicroStrategy was also included in the Nasdaq-100 index, alongside Palantir Technologies and Axon Enterprise, affirming its growing market presence.
