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CoinGape 2024-12-30 23:34:00

Here’s Why MicroStrategy Stock Is Down 20% Amid Bitcoin Bets

American business intelligence and software firm MicroStrategy Inc has seen about 20% loss on its stock price despite its sustained Bitcoin acquisition strategy. According to market data, the MSTR stock is down by 2.46% in After Hours trading after closing Monday’s session at 8.19% to $302.96. This stock price turnout has driven many debate on the cause despite the alleged correlation it maintains with the US Dollar. MicroStrategy Stock and the Bitcoin Levered Play Global industry commentary platform The Kobeissi Letter provided insights into what is happening with MicroStrategy and Bitcoin. Kobeissi noted that the decoupling in MicroStrategy stock and Bitcoin started about a month ago. Within that time, Bitcoin price has inked a mild 2% growth with MSTR down by more than 20%. While MicroStrategy is considered a levered Bitcoin play, the stock price’s divergence is to much. The Kobeissi Letter pointed out the firm’s business model which is to take on debt to buy more BTC. At the moment, the business intelligence firm has maxed out its debt funding sources including its shares. As reported by Coingape, MicroStrategy acquired 2,138 BTC on December 30, valued for $209 million. In order to keep making these purchases, it proposed raising its share count by 10 billion. This way, The Kobeissi Letter noted that MicroStrategy can continue borrowing against the stock to buy more Bitcoin. This will ultimately push BTC price higher and give its shares an allowance for growth. However, the current share slump hinges on how investors perceive the 10 billion share count proposal. If approved, it would dilute MSTR stock too much and if not, MicroStrategy will get stuck with its Bitcoin funding strategy. If the plan is approved, bears will say that this is a highly dilutive move for existing shareholders. However, if it is not approved, then MicroStrategy will be unable to continue buying #Bitcoin on leverage. Buying Bitcoin is obviously an integral part of $MSTR ‘s strategy. pic.twitter.com/D6qcb6fNoG — The Kobeissi Letter (@KobeissiLetter) December 30, 2024 Despite this dilemma, The Kobeissi Letter hinted that Michael Saylor alone has a 46.8% voting power. With just 4% needed, chances are this stock count will gain the board’s approval. Here’s What The Future Holds Barring the funding challenges of the past week, MicroStrategy stock remains one of the best performing in the market this year. According to market data, MSTR is up 342% Year-to-Date (YTD) as compared to the S&P 500 Index that is up 24.54%. In the new year, MicroStrategy is poised to stabilize the best funding strategy to keep up with its treasury reserve agenda. Meanwhile, MSTR’s inclusion in the Nasdaq-100 might reboot the stock’s attractiveness overall. With Bitcoin also likely to rebound ahead of the pro-crypto Donald Trump inauguration, the stock’s big rebound is also possible. As MicroStrategy navigates its levered Bitcoin play, it is arguably setting a precedent for firms like Riot Platforms . The post Here’s Why MicroStrategy Stock Is Down 20% Amid Bitcoin Bets appeared first on CoinGape .

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