MicroStrategy shares slip 8% after its end-of-year Bitcoin buy

Shares in Michael Saylor’s MicroStrategy (MSTR) fell over 8% after its $209 million Bitcoin buy on Dec. 30, with some observers starting to share concerns about its “leveraged” play.

MSTR made the purchase just an hour before the trading day began on the Nasdaq stock exchange, which opened at 2:30 pm UTC. Within an hour, its shares fell 5.3% from $318.89 to $302.09.

Despite a partial recovery during the session, it ended the day at $302.96, according to Google Finance data, and then fell another 3.19% in after-hours trading, bringing the price down to $293.59.

MicroStrategy’s stock price was trading at $293.59 in the after-hours market. Source: Google Finance

According to a filing, MicroStrategy funded the acquisition by selling 592,987 shares during the same week.

The latest Bitcoin (BTC $92,772) purchase marks the eighth consecutive week the business intelligence firm has purchased Bitcoin. Since Oct. 31, MicroStrategy has bought BTC weekly, adding 194,180 BTC to its holdings. 

MicroStrategy’s “hyperbitcoinization”

Trading resource The Kobeissi Letter said in a Dec. 30 X post that the markets are concerned about MicroStrategy’s proposed 10 billion increase in authorized shares.

Kobessi said that through a mix of convertible notes and debt issuances, MSTR has heavily leveraged itself. The company must issue more debt or equity to continue its Bitcoin buying spree. It added:

Total share could rise from 330 million to 10.33 BILLION if it is approved. The problem is, it has left the company in a “lose-lose” situation for now.

While MSTR’s price has plunged 20.2% over the past 30 days, it is up 342.2% since Jan. 1.

In a Dec. 30 X post, Hartmann Capital founder Felix Hartmann said that MicroStrategy’s stock price will “eventually implode, but most shorts will time it wrong and blow up betting against BTC and MSTR.”

“Within 5 years, MSTR will first become a top 5 company by market cap before eventually going bankrupt. We’re still early,” Hartmann said, though adding it could also go the other way:

Counterargument is that in a raging bull he'll be able to lever up materially more, and repaying $1-4bn of 2027-9 maturities will be peanuts when he sits one $300bn worth of BTC.

Unchained head of market research Joe Burnett called MicroStrategy’s current strategy “hyperbitcoinization.”

Burnett said that the firm trades at a premium so it can grow its Bitcoin-per-share through leverage.

“Trading at a premium lets them sell shares above NAV, buy more bitcoin, and reduce leverage—further increasing BTC per share. Rinse and repeat,” Burnett said.

On Dec. 23, MicroStrategy was added to the Nasdaq-100 index, meaning it is among Nasdaq’s 100 largest stocks by market capitalization.

MicroStrategy was one of three companies to be added to the index alongside Palantir Technologies (PLTR) and Axon Enterprise (AXON), according to a Dec. 13 statement published by Nasdaq.

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