MicroStrategy’s five-year total return has outpaced the underlying earnings growth of alternative financial instruments in the stock and cryptocurrency markets. In fact, the company’s share price has risen 995% over that period, and shareholders received total shareholder return of 428% for 2023.
MicroStrategy currently holds 226,500 BTC (over $13 billion), which it acquired at an average price of about $37,000. With Bitcoin currently trading at around $59,000, MicroStrategy’s unrealized gain is about $5.39 billion. That’s nearly 80% more than the company’s net worth.
At the same time, the company’s total liabilities increased more than fourfold over four years, from $913 million to $3.95 billion.
MicroStrategy management regularly informs shareholders that its bitcoin holdings are growing as new investors raise funds. Over the past few years, the company has increased its share count by more than 80% to fund purchases. If the price of bitcoin were to collapse before MicroStrategy’s subscriber list had grown enough to offset falling revenues, the company’s valuation could plummet as shareholder value dilution and debt could strangle the business.
Additional fear Experts are concerned about MicroStrategy’s intention to make its shares more affordable for purchase in the wake of new investments and conduct a 10-for-1 forward split. This is already the third stock split in the company’s history since it went public in June 1998.
Earlier, the Japanese company MetaPlanet announced its readiness to continue acquiring bitcoins with funds received from the sale of shares – in an attempt to repeat the success of MicroStrategy. MetaPlanet’s immediate plans include purchasing the first cryptocurrency for about 10.08 billion yen, which is equivalent to $70 million.
Source: Bits
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