Company profile
Introduction
MicroStrategy (ticker: MSTR) is a US listed company. The company was founded in 1989 by Michael J. Saylor, Sanju Bansal and Thomas Spahr. Specializes in developing software to analyze internal and external enterprise data to make business decisions and develop mobile applications.
Main business
When MicroStrategy was first established, the main services it provided were business intelligence, data analysis, mobile software development and cloud computing; it could be regarded as a typical small software service provider.
The main competitors of MicroStrategy include SAP’s Business Objects, IBM’s Cognos and Oracle’s BI platform. But now few people know what this company’s original business was, because it has become irrelevant.
Initial public offering
On June 11, 1998, MicroStrategy became a public company through an initial public offering.
A controversial past
Income is false
MicroStrategy was sued in a securities fraud class action lawsuit in March 2000 after it significantly overstated its 1998 and 1999 revenues.
Tax fraud
In August 2022, the Attorney General of the District of Columbia indicted Thaler for tax fraud, accusing him of illegally evading more than $25 million in taxes by impersonating residents of other jurisdictions. MicroStrategy is accused of working with Thaler to help him evade taxes by misreporting his residential address to local and federal tax authorities and failing to withhold Washington, D.C., taxes. MicroStrategy said the case was “a personal tax matter involving Mr. Thaler” and called the claims against the company “spurious” and that it would “vigorously defend against this overreach.”
Was investigated by the SEC
On March 20, 2000, following a review of its accounting practices, the company announced that it would restate its financial performance for the previous two years. Its stock price rose from $7 per share to $333 per share in one year, and fell to $120 per share in one day, a 62% drop, considered the year the dot-com bubble burst.
In December 2000, the U.S. Securities and Exchange Commission filed charges against the company and its senior executives. MicroStrategy and certain of its officers were subsequently sued for fraud. In December 2000, Thaler, Bansal and the company’s former chief financial officer reached a settlement with the SEC without admitting wrongdoing and each paid a fine of $350,000. The officials also turned over a total of $10 million in stolen goods. The company settled with the SEC and hired an independent director to ensure regulatory compliance.
It’s all about Bitcoin
Co-founder and director Seiler decided to start investing in Bitcoin in 2020, initially as a hedge against inflation. Due to MicroStrategy’s large holdings of crypto assets, the company’s securities are widely considered an alternative to Bitcoin.
Buy Bitcoin all the way up
In August 2020, MicroStrategy invested $250 million in Bitcoin as a Treasury Reserve asset, citing declining cash returns, a weak U.S. dollar, and other global macroeconomic factors. The company subsequently made several large Bitcoin purchases; as of September 19, 2022, MicroStrategy and its subsidiaries held approximately 130,000 Bitcoins, with a total acquisition price of $3.98 billion, averaging per Bitcoin The purchase price is $30,639. Thaler was the driving force behind the strategy.
On September 25, 2023, MicroStrategy announced that between August 1, 2023 and September 24, 2023, MicroStrategy and its subsidiaries acquired approximately 5,445 Bitcoins at an average price of approximately $147.3 million in cash.
In the second quarter of 2024, 1,2222 Bitcoins were purchased.
According to the 8-K filing released on September 13, 2024, MicroStrategy purchased an additional 18,300 Bitcoins at an average price of US$60,408 per coin from August 6 to September 12, for a total price of approximately 1.11 billion. Dollar.
On November 11, 2024, it was announced that it had spent US$2 billion to buy 27,200 Bitcoins.
MicroStrategy bought approximately 51,780 Bitcoins at a price of approximately $4.6 billion, with an average price of $88,627. This is the largest purchase by the crypto hedge fund agent since it began acquiring digital assets more than 4 years ago. According to documents published by the SEC, MicroStrategy bought these Bitcoins between November 11 and 17.
Repeatedly raising funds to buy Bitcoin
The company, which initially used cash to make purchases, has shifted to using proceeds from the issuance and sale of stock and convertible debt sales to leverage its purchasing power.
Increase Bitcoin reserves through the sale of $600 million in convertible senior notes in March 2024.
Micro-strategy for large-scale investment in Bitcoin announced on November 24, 2024, the issuance of convertible bonds with a scale of US$1.75 billion, and plans to use the proceeds from the bond issuance to purchase more Bitcoins.
The well-known financial website Ba Rong reported that MicroStrategy announced after the market close on November 18, 2024, that it would issue convertible bonds at zero interest rates to qualified institutional investors in accordance with Section 144A of the Securities Act of 1933; the company announced in September 2024 A batch of convertible bonds of about US$1 billion was issued at the end of the month, and it has also increased its purchases of Bitcoin many times in recent months.
Barong analyzed that the market has a strong interest in micro-strategy convertible bonds, because the volatility of micro-strategy stocks is extremely high, which brings arbitrage space to investors who buy convertible bonds, and the company can therefore issue bonds at “zero interest rate” .
The company’s CEO expanded the strategy in 2024, saying the company aims to raise $42 billion over the next three years.
When the Bitcoin crash
In 2022, the company faced margin calls due to poor stock markets and a sharp decline in Bitcoin. On December 22, 2022, MicroStrategy sold 704 Bitcoins, which was their first sale of Bitcoins, for an amount of approximately US$11.8 million.
The company with the most Bitcoins
Declaration information shows that as of November 17, 2024, MicroStrategy and its subsidiaries held a total of 331,200 Bitcoins, and the average price of each Bitcoin was approximately US$49,874; MicroStrategy’s hand positions accounted for the overall Bitcoin circulation The proportion of 20 million pieces is slightly higher than 1.5%.
It currently holds more than $29 billion worth of Bitcoin. It is the company with the largest number of Bitcoins in the world.
Shorted
Citron Research, a well-known short-selling institution, wrote in an article on X on November 21, 2024 that the stock price of MicroStrategy was “oversold” and clearly deviated from fundamentals, and may face pressure in the future. Citron pointed out that buying micro-strategy stocks is equivalent to investing in Bitcoin indirectly, but now it is very easy to buy and sell Bitcoin directly, and investors don’t have to do anything extra, so they have shorted micro-strategy stocks. As a result, the stock price plummeted 16% on November 21, 2024.
Capital market performance
Bullish after Trump won
After Trump was elected, the market expected that cryptocurrency policies would be friendlier, driving the price of Bitcoin to soar, once exceeding $93,000. As the price of Bitcoin soared this year, micro-strategies also became a hot stock.
Stunning stock trading volume
MicroStrategy’s transaction volume reached US$33.27 billion on November 20, 2024, second only to Nvidia, which released its financial report. Nvidia’s transaction volume that day was US$45.2 billion. In fact, MicroStrategy once exceeded Nvidia’s trading volume during the day.
Share price performance
From the beginning of 2024 to November 22, 2024, the stock price soared 515.7%. In the past five years, it has increased by 2,682.85%.
Market value
Presumptive U.S. President Trump shouted in support of cryptocurrency during his campaign. Since Trump won the election, the price of Bitcoin has repeatedly hit new highs. The market value of micro-strategies for major Bitcoin players has also risen with the trend, breaking through the 100 billion U.S. dollar mark and reaching a market value of 110 billion U.S. dollars. Became one of the companies with the highest market capitalization not included in the S&P 500 Index.
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