MicroStrategy (MSTR) reported a significant Q1 loss of $4.2 billion per share due to a Bitcoin price decline, yet announced a new $21B equity offering aimed at expanding its Bitcoin holdings. The company increased its long-term BTC yield and gain targets while experiencing a modest rise in stock value.
MicroStrategy (MSTR) has announced a whopping $21 billion at-the-market common stock equity offering to bolster its Bitcoin (BTC) purchasing strategy, despite reporting a first-quarter loss of $4.2 billion, equivalent to $16.49 per share. The company’s substantial writedown of $5.9 billion on its Bitcoin holdings was largely due to the recent slump in BTC prices, which added pressure on its finances. This market environment, however, hasn’t deterred Executive Chairman Michael Saylor’s bullish outlook on acquiring more cryptocurrency.
By the end of the quarter, MicroStrategy held 528,185 Bitcoin, although that number has since jumped to 553,555. The firm’s outlook also shifted positively, with the BTC Yield now targeted at 25%, a significant increase from the previous 15%, alongside a boost in the BTC $ Gain target from $10 billion to $15 billion. This reflects a strategic pivot aiming to strengthen its financial footing amid the volatile crypto market.
Even as the software division saw a drop of 3.6% in revenue — totalling $111.1 million for the quarter — subscription service revenue did show a notable increase to $37.1 million compared to $23 million last year. The company also reported a BTC Yield of 11% for the quarter, nearing its $10 billion gain target with approximately $4.1 billion achieved.
Despite these losses, MicroStrategy’s stock has climbed 27% year-to-date, with Bitcoin’s price currently hovering around $96,547, reflecting a short-term increase of 2.5%. The strategic move to offer another $21 billion in equity shares emphasizes MicroStrategy’s commitment to strengthening its position in the crypto space.
Phong Le, CEO of MicroStrategy, expressed confidence in their capital markets strategy, stating, “We continue to grow our Bitcoin holdings while delivering superior shareholder value.” He highlighted the increasing trend of other public companies adopting Bitcoin as part of their treasury strategy, positioning MicroStrategy as a pioneer in this evolving market.
In after-hours trading, there’s been a slight uptick in the company’s shares, indicating some positive investor sentiment. As the crypto environment remains fluid, all eyes on MicroStrategy and its Bitcoin agenda could yield interesting trends in the coming months, especially given their aggressive acquisition approach amidst challenging market conditions.
