Why MicroStrategy (MSTR) Stock Is Down Today

What Happened?

Shares of bitcoin development company MicroStrategy (NASDAQ:MSTR) fell 2.3% in the afternoon session after the company announced it purchased an additional 850 bitcoins for $99.7 million, funding the acquisition by selling its own shares. 

The move boosted MicroStrategy's total Bitcoin holdings to 639,835, yet the market reacted negatively. The company financed the purchase through an 'at-the-market' stock offering. This practice allows the company to build its crypto reserves without taking on new debt, but it also dilutes the ownership stake of existing shareholders. Investors often react poorly to such moves as dilution can reduce the value of their shares. The news contributed to the stock hitting a five-month low. This followed a period where the company's shares had already underperformed Bitcoin, signaling potential investor weariness with the strategy of repeatedly issuing new stock to buy more of the digital asset.

The shares closed the day at $335.79, down 2.6% from previous close.

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What Is The Market Telling Us

MicroStrategy’s shares are extremely volatile and have had 72 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 3 days ago when the stock dropped 2.3% after a broader cryptocurrency market downturn and comments from CEO Michael Saylor about potentially selling Bitcoin to fund dividends. 

The crypto market stumbled, with its global market cap slipping and top assets like Bitcoin dropping 0.6% to trade around $116,601. This broad weakness hit digital asset stocks, with peers also trading in the red. 

Compounding the issue, MicroStrategy's CEO Michael Saylor remarked at an event that in a "worst-case scenario," the company might sell Bitcoin to cover dividend payments. 

The comment drew sharp criticism from short-seller Jim Chanos, who labeled the idea "financial gibberish." This news fed into existing investor worries about the company's heavy use of share sales to raise funds and a shrinking premium on its stock compared to the value of its Bitcoin holdings.

MicroStrategy is up 12.2% since the beginning of the year, but at $336.60 per share, it is still trading 29% below its 52-week high of $473.83 from November 2024. Investors who bought $1,000 worth of MicroStrategy’s shares 5 years ago would now be looking at an investment worth $21,822.

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