Stock Track | MicroStrategy Plummets 5% as Bitcoin Bet Raises Dilution Fears

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MicroStrategy (MSTR) shares plummeted 5.02% on Tuesday, in the final trading session of 2024, amid concerns over the company's aggressive Bitcoin-buying strategy and potential dilution from issuing more shares.

The software company, known for its leveraged bet on Bitcoin, has continued to double down on its crypto holdings through debt financing and stock offerings. Last week, MicroStrategy announced the purchase of an additional 2,138 Bitcoins for $209 million, bringing its total holdings to a staggering 446,400 Bitcoins acquired at an average price of $62,428 per coin.

However, MicroStrategy's shares have diverged from Bitcoin's price movement in recent weeks, with the stock underperforming the cryptocurrency as the company proposed increasing its authorized share count from 330 million to over 10 billion. This move has raised fears of potential dilution among existing shareholders, despite the proposal's likely approval due to co-founder Michael Saylor's control over nearly 47% of the voting power.

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Comments

  • Reglloyd
    01-02
    Reglloyd
    If you're a Microstrategy shareholders we fully understand the dynamic and what's at play. we champion the dynamic. Unfortunately it flips all common wisdom in the corporate Finance world. The Benchmark is Bitcoin. They are not interested in holding their cash in any other asset other than Bitcoin. Is the share price volatile? Absolutely, it's volatile because of the way they leverage capital to buy more Bitcoin by increasing your % Bitcoin into each Microstrategy share. Five years ago Microstrategy was a 1.5 Billion company , it was going nowhere , today it's worth 100 Billion . We call all of the above , including the share dilution that is at play, Accretive!!!!! Disclaimer: The information provided is for educational purposes only and not financial advice. Please do your  own
  • Guavaxf30
    01-01
    Guavaxf30
    It's the concept and valuation (of MSTR) that is wrong.  When you buy into MSTR, you are buying into a company that has no substance other than their holding of Bitcoin. And as their new purchase price of Bitcoin is out of the money (prices of Bitcoin has fallen below their last purchase prices), it reveals the fragility of the concept. For MSTR to justify the high valuation of current prices, even after recent few days of correction, Bitcoin has to keep rising. And by A LOT!  It is not enough to see 1-2% increase in Bitcoin prices. They have to keep going up by at least 5% and consistently. Very very dangerous to be hoping for this. If you are punting and hoping for a FOMO reaction from the buying public, sure it is possible to play with this strategy. But you must be aware that
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