MW MicroStrategy buys $2 billion in bitcoin in 10 days. Is there $42 billion to go?
By Tomi Kilgore
Stock heads for first record in 24 years, as Coinbase and Mara shares also continue to ride the postelection cryptocurrency frenzy
Shares of MicroStrategy Inc. entered record territory Monday for the first time in 24 years, as the self-proclaimed largest corporate holder of bitcoin continued to ride the postelection frenzy in cryptocurrency plays.
MicroStrategy is still a software and services company, with all its revenue coming from that business. But the stock has traded more like bitcoin than like other software-sector stocks since the company said it was adopting the cryptocurrency as its primary treasury reserve asset in 2020.
And its actions suggest its bitcoin bet is going to grow exponentially in the coming years.
The stock $(MSTR)$ shot up 23.7% in afternoon trading and is now trading above its record closing price of $313, which was reached on March 10, 2000.
It has rocketed 46.8% since Donald Trump's election win last week, while bitcoin has run up about 25% over the same time to also trade in record territory. Trump has vowed to embrace cryptocurrencies, by building a U.S. cryptocurrency reserve and by creating a more favorable regulatory environment.
Read: Bitcoin bulls are eyeing $100,000 by year-end after Trump win. But watch for this catch.
Shares of other crypto companies that don't have a side hustle like MicroStrategy's have also soared since the election.
The stock of Mara Holdings Inc. $(MARA)$, a cryptocurrency miner formerly known as Marathon Digital, charged 30.4% higher Monday, toward its biggest gain since it soared 30.9% on Jan. 12, 2023. The shares have rallied 54.6% since Trump's win.
Cryptocurrency exchange Coinbase Global Inc.'s stock $(COIN)$ shot up 22.4% toward a three-year high on Monday and has risen 70.8% since the election.
Meanwhile, shares of online brokerage Robinhood Markets Inc. (HOOD), which offers cryptocurrency trading, powered up 10.5% on Monday, also toward a three-year high, and have climbed 35.1% over the past four trading sessions.
MicroStrategy said ahead of Monday's open that it spent $2.03 billion to buy about 27,200 bitcoins between Oct. 31 and Nov. 10, at an average price of $74,463 each.
At current prices, with bitcoin surging 7.8% to $86,625 in recent trading, the bitcoin that MicroStrategy just bought would now be worth about $2.36 billion.
The company said it got the money to buy that bitcoin from a sale of $2 billion in shares it announced on Aug. 1.
And on Oct. 30, the company announced a "strategic goal" of raising $42 billion worth of capital over the next three years, made up of $21 billion in equity and $21 billion in debt.
Chief Executive Phong Le said at that time that the plan was to use that money "to buy more bitcoin as a treasury reserve asset."
As of Nov. 10, the company said it held 279,420 bitcoins. At current bitcoin prices, that holding would be valued at about $24 billion. MicroStrategy's current market capitalization is $66.9 billion.
As Benchmark analyst Mark Palmer noted, MicroStrategy's total bitcoin holdings were acquired at an aggregate purchase price of approximately $11.9 billion, and an average price per bitcoin of $42,692.
The stock has climbed more than fivefold, up 429%, year to date, while bitcoin has more than doubled, with a gain of about 106%. Meanwhile, the SPDR S&P Software & Services exchange-traded fund XSW has advanced 26.3% this year.
The correlation coefficient between MicroStrategy's stock and bitcoin this year has been 0.87, in which a reading of 1.00 would mean they move exactly in sync.
The correlation between MicroStrategy's stock and the SPDR software ETF has been 0.69.
-Tomi Kilgore
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(END) Dow Jones Newswires
November 11, 2024 15:09 ET (20:09 GMT)
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