MicroStrategy (MSTR) experienced a wild day as its shares dropped by 8% after it bought Bitcoin worth $209 million as the year comes to a close, causing some observers to raise concerns about its leveraged strategy.
MSTR bought its Bitcoin before the trading day began on the Nasdaq stock exchange. One hour after the trading day was opened, its shares dropped 5.3% from $318.89 to $302.09. At the close of the trading day, the company had recovered and was trading at $302.96, according to Google Finance data. Yet, it fell again with 3.19% during the after-hours trading, causing the price to drop to $293.59.
MicroStrategy has been purchasing Bitcoin for eight consecutive weeks since October 31. During this period, the firm added 194,180 BTC to its Bitcoin reserve, which currently stands at 2,093,180 BTC.
In its latest filing, the company said it sold up to 592,987 shares to raise funds for Bitcoin purchases.
In a December 30 X post, the Kobeissi Letter shared that the market was uneasy with this move. MicroStrategy has also borrowed much money from convertible notes and debt issuances, explains Kobeissi.
The company may need to borrow more money or issue even more shares to keep buying Bitcoin. If the proposal is approved, the total number of shares could rise from 330 million to 10.33 billion. This situation is difficult for the company, with risks on both sides.
MicroStrategy bought less Bitcoin as stock dipped
Although MicroStrategy has sustained its Bitcoin acquisition strategy, it has recently resorted to buying fewer Bitcoins than in earlier days.
During its securities filing last week, the company clarified that it purchased $561 million worth of Bitcoin, a drop from $1.5 billion the week before. The drop is louder than December 9 when it bought $2.1 billion worth of Bitcoin.
There is no clarity on why the weekly purchase is systematically declining, with some speculating that it is becoming expensive to purchase Bitcoins when the price levels are historically high.
However, the most worrying concern for investors could be whether MicroStrategy is becoming less bullish on crypto, given that despite Bitcoin’s price growing, its shares are experiencing a dip.
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