Shares of MicroStrategy experienced a notable decline of over 8% following the company’s recent $209 million acquisition of Bitcoin . This move has raised eyebrows among investors who are now expressing concerns regarding the company’s heavy reliance on leveraged strategies. The Bitcoin purchase occurred shortly before the NASDAQ stock market opened at 2:30 PM UTC, leading to an immediate drop in share prices, which fell from $318.89 to $302.09 within the first hour of trading.
Despite a slight recovery during the day, MicroStrategy’s stock ultimately closed at $302.96. The decline continued in after-hours trading, resulting in an additional drop of 3.19%, bringing the stock value down to $293.59. Funding for the latest Bitcoin buy was sourced from the sale of approximately 592,987 shares within the same week. This purchase marks the eighth consecutive week that MicroStrategy has added Bitcoin to its holdings, increasing its total by 194,180 BTC since October 31.
Investor worries are further compounded by MicroStrategy’s intent to increase its authorized shares by $10 billion. Analysts point out that this could lead to a significant dilution of existing shares, potentially rising from 330 million to over 10 billion. The company has adopted a strategy involving a mix of convertible notes and debt issuances, which has placed it in a precarious position.
While MicroStrategy’s stock has fallen 20.18% in the past month, it remains up an impressive 342.15% year-to-date. The company’s strategy has been characterized as “hyperbitcoinization,” enabling it to leverage its stock trading premium to enhance Bitcoin holdings per share. The recent addition of MicroStrategy to the NASDAQ -100 index, alongside other firms, underscores its notable market presence despite current challenges.
