Another piece of news from the worldwide were brought to public by RoboticsOnline (reviewed here) about MicroStrategy and its losses from Bitcoin holdings.
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Here’s the full news:
MicroStrategy’s realized loss on Bitcoin sits at $1.3B as stock plunges
MicroStrategy is among the largest Bitcoin holders. The software analytics provider has been accumulating more BTC despite the bear market. The unrealized loss from MicroStrategy’s Bitcoin holdings currently stands at $1.3 billion.MicroStrategy stock falls 10%
Brent Thill has now downgraded MicroStrategy’s stock to “underperformance.” Before the downgrade, the stock was categorized as “hold.” The downgrade comes amid the failure of the cryptocurrency market to recover to previous highs.
This downgrade also maintained MicroStrategy’s price target at $180. MicroStrategy’s stock is used to provide exposure to investors that want to gain exposure to Bitcoin without investing in the coin directly because the stock’s performance reflects what is happening with Bitcoin’s price. On Monday this week, the price of Bitcoin dropped by more than 10% to $237 after the price of Bitcoin dropped to below $21,000.
MicroStrategy has an overall market cap of $2.8 billion. The company has been aggressively accumulating Bitcoin, which now holds 129,200 coins, valued at around $2.7 billion. The company has acquired these coins by spending around $4 billion, which shows that the NASDAQ-listed company is sitting at an unrealized loss of $1.3 billion from its Bitcoin holdings.
The downgrade by Brent Thill follows MicroStrategy’s massive exposure to Bitcoin and the slowing down of its core operations. In June, the crypto market witnessed high selling pressure. This triggered rumors that MicroStrategy would get a margin call for a leverage position it holds for a $205 million loan backed by Bitcoin.
This is not the first time that MicroStrategy’s stock has been downgraded. Before the Jeffries analysis, analysts from Wall Street expressed pessimistic views on MicroStrategy’s future amid the declining prices in the cryptocurrency market.
An analysis by StockNews.com downgraded MicroStrategy’s stock to a “sell” rating as published in a report released on July 2. On May 9, TheStreet also downgraded the stock from a “c” to “d+.”
Crypto stocks plunge amid market crash
MicroStrategy is not the only crypto stock that has plummeted because of the bear market in the crypto space. Several crypto-related stocks have been trading downhill following increased selling pressure.
Coinbase and Robinhood are two of the leading publicly listed cryptocurrency exchanges. According to Kenneth B. Worthington, an analyst with JP Morgan, the shares of the two companies would dilute by nearly 7% annually over the next few years.
Some of the leading companies in the cryptocurrency space tend to use stock-based compensation to attract new employees and lower cash expenses. The recent slump in the stocks of such companies could lead to more issuance of shares than what would have happened if the stock was trading at higher levels. New stock issuance is used to compensate the employees.
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