In a recent press release, MicroStrategy MSTR disclosed that it had sold a chunk of its Bitcoin holdings for the first time since it began purchasing the virtual currency in 2020.
Bitcoin investments by MicroStrategy are a component of its corporate strategy, expanding its enterprise analytics software company and offering cloud solutions to clients.
Michael Saylor, the chairman of MSTR, thinks that Bitcoin can serve as a reliable long-term inflation hedge. As the market increases to its prior peak, he anticipates that virtual currency will become the dominant cryptocurrency.
The macroeconomic environment has become incredibly unstable due to growing inflation and the recession, and investors have grown exceedingly cautious about the rise of equities in cyclical industries like technology.
Additionally, investors are wary of alternative investment opportunities like cryptocurrencies since insufficient historical data supports their rise.
In such an environment, the volatility of the MicroStrategy stock increased to match that of the cryptocurrency market and the present macroeconomic climate. Compared to the drop of 30.5% seen by the Zacks Computer – Software industry, the company’s shares have fallen 74.6% year to date.
The average price per coin was booked at $16,776 net of fees and expenditures, representing a capital loss of roughly 50% compared to its average purchase price of slightly over $30,000 per coin. According to a statement from MicroStrategy, the business intends to record its losses against prior capital gains.
MSTR also disclosed that the business raised its net holdings of Bitcoin by making many acquisitions in November and December.
It bought 2,395 bitcoins between November 1 and December 21 for $42.8 million in cash, which works out to an average price of $17,871 per bitcoin through MicroStrategy. On December 24, it also paid $13.6 million to buy 810 Bitcoins at an average cost of $16,845.
The business affirmed that, despite recent losses, it is steadfast in its long-term decision to buy Bitcoin and maintain it as a hedge position against macroeconomic uncertainty.
MSTR recorded revenues of $125.4 million in the third quarter of 2022 as opposed to $128.0 million in the same quarter last year.
According to the Zacks Consensus Estimate, the fourth quarter of 2022’s sales is projected to be $132.65 million, which represents a decline of 1.39% from the same quarter last year.
The Zacks Rank for MicroStrategy is #4 at the moment (Sell). Here are a few higher-ranked stocks in the more significant tech sector to consider.
Zacks has ranked Arista Networks ANET as number one (Strong Buy). The entire list of today’s Zacks #1 Rank stocks is available here. Compared to the Zacks Communication – Components industry’s decline of 43.7% in the year-to-date period, ANET’s shares have been down 17.1%.
Compared to the 43.7% drop seen by the Zacks Electronics – Manufacturing Machinery industry, the year-to-date performance of ACLS shares has increased by 3.8%.