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CryptoIntelligence 2024-12-31 04:13:28

MicroStrategy Stock Drops Amid Concerns Over Bitcoin Strategy

Shares of Michael Saylor’s MicroStrategy (MSTR) fell over 8% following its latest $209 million Bitcoin purchase, sparking concerns among some observers about its “leveraged” strategy. MicroStrategy announced the acquisition just an hour before Nasdaq trading began at 2:30 pm UTC. Within the first hour, its shares dropped 5.3%, falling from $318.89 to $302.09. While partially recovering during the session to close at $302.96, the stock declined another 3.19% in after-hours trading, settling at $293.59, according to Google Finance data. Bitcoin Purchases and Stock Dilution MicroStrategy funded the Bitcoin acquisition by selling 592,987 shares earlier that week, according to a regulatory filing. This marked the eighth consecutive week the company bought Bitcoin, adding 194,180 BTC to its holdings since Oct. 31. Concerns are growing about the company’s financial strategy, with The Kobeissi Letter noting in a Dec. 30 post on X that MicroStrategy’s plan to increase authorized shares by $10 billion has raised alarms. The firm’s heavy reliance on convertible notes and debt issuances leaves it needing to issue more debt or equity to sustain its Bitcoin buying spree. “The problem is, it has left the company in a ‘lose-lose’ situation for now,” Kobeissi added. Market Reactions and Predictions Despite a 20.18% decline in MSTR’s price over the past 30 days, the stock remains up 342.15% since Jan. 1. Hartmann Capital founder Felix Hartmann suggested in a Dec. 30 post that MicroStrategy’s stock could “eventually implode,” though he acknowledged the possibility of significant short-term gains. Unchained head of market research Joe Burnett described the company’s strategy as “hyperbitcoinization,” highlighting its use of leverage to grow Bitcoin-per-share. On Dec. 23, MicroStrategy was added to the Nasdaq-100 index, joining Palantir Technologies and Axon Enterprise as new additions to Nasdaq’s largest stocks by market capitalization.

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