MicroStrategy (MSTR) Makes its 1st Bitcoin Sale Via Subsidiary – December 29, 2022
- December 29, 2022
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MicroStrategy (MSTR – Free Report) recently announced that the company has sold a portion of its Bitcoin holdings for the first time since it started buying the digital currency in 2020.
MicroStrategy’s investments in Bitcoin are part of its corporate strategy, alongside growing its enterprise analytics software business and cloud solutions for customers.
MSTR’s chairman Michael Saylor believes Bitcoin to be an effective long-term hedge against inflation. He expects the digital currency to be the primary cryptocurrency as the market grows to its previous high.
Amidst rising inflation and recession, the macro-economic situation has become extremely volatile, and investors have become highly wary about the growth of stocks operating in cyclical sectors like tech. Also, investors are cautious of alternate investment resources like cryptocurrencies, which do not have enough historical data to back up their growth.
Amidst such a backdrop, MicroStrategy stock became as volatile as the cryptocurrency market and the current macroeconomic situation. The company’s shares have crashed 74.6% in the year-to-date period compared with the Zacks Computer – Software industry’s decline of 30.5%.
MicroStrategy Incurs Loss in its First Sale of Bitcoin
MicroStrategy sold 704 bitcoins for $11.8 million in cash through its subsidiary MacroStrategy LLC.
The average price per coin was booked at $16,776 net of fees and expenses, which reflects a capital loss of nearly 50% compared to its average purchase price of just more than $30,000 per coin. MicroStrategy announced that the company plans to book its losses against previous capital gains.
MSTR also announced that the company made multiple Bitcoin purchases in November and December, which increased its net holdings. Between Nov 1 and Dec 21, it purchased 2,395 bitcoins for $42.8 million in cash, representing an average price of $17,871 per Bitcoin through MacroStrategy. It also spent $13.6 million on Dec 24 to purchase 810 Bitcoins at an average price of $16,845 per Bitcoin.
Even amid the recent losses, the company stated it is adamant about its Bitcoin purchase and hold strategy in the long term as a hedge position against macroeconomic turmoils.
In the third quarter of 2022, MSTR reported revenues of $125.4 million compared with $128.0 million in the year-ago period. The Zacks Consensus Estimate for revenues for the fourth quarter of 2022 is pegged at $132.65 million, which implies a fall of 1.39% from the year-ago period.
Zacks Rank & Stocks to Consider
MicroStrategy currently carries a Zacks Rank #4 (Sell). Here are some better-ranked stocks to consider in the broader tech sector.
Arista Networks (ANET – Free Report) carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ANET’s shares have fallen 17.1% in the year-to-date period compared with the Zacks Communication – Components industry’s fall of 43.7% in the year-to-date period.
Axcelis Technologies (ACLS – Free Report) is a Zacks Rank #2 (Buy) stock.
ACLS shares have gained 3.8% in the year-to-date period compared with the Zacks Electronics – Manufacturing Machinery industry’s decline of 43.7%.
Bumble (BMBL – Free Report) carries a Zacks Rank #2.
BMBL’s shares have slumped 41.3% in the year-to-date period compared with the Zacks Internet Software industry’s decline of 62%.