After Wednesday’s close, MicroStrategy Inc. is expected to announce its software business results, but few Wall Street analysts are likely to be interested. Because the stock is essentially just a bitcoin play for the majority of investors.
Investors were taken aback when MicroStrategy (MSTR) revealed in its most recent quarterly report that it will raise $42 billion over the next three years by selling debt and ordinary stock in order to purchase bitcoin (BTCUSD).
Although it might not be as big of an announcement, investors might be looking for another one. Since it spent $20.5 billion to purchase 218,887 bitcoins between October 31 and January 26, the firm has now accomplished nearly half of its three-year objective in just three months.
Since the stock’s future is dependent on the company’s ability to continue buying bitcoin, investors essentially want to hear that it will continue to do so.
Although bitcoin has no inherent worth, as noted by Mizuho analyst Dan Dolev in a recent note to clients, rising worldwide use of the digital currency, a sluggish rate of supply growth, and a positive political climate all point to future price increases.
The stock of MicroStrategy also needs to rise. The stock has stalled in recent months and is currently trading roughly 28% behind its post-results, post-election record level of $473.83 on November 20, despite having been trading roughly 38% higher since the company’s last earnings release.
Bitcoin, on the other hand, did not reach its peak until December 17, when it reached an intraday high of $109,224. As of right now, it was trading little over 11% below that record.
The corporation stated in its most recent filing that it had purchased 471,107 bitcoins at an average price of $64,511 each, for a total of almost $30.4 billion. That ownership would be worth about $45.6 billion at today’s prices.
According to FactSet’s survey of analysts, MicroStrategy’s software division, which Mizuho’s Dolev claimed was a nearly “inconsequential portion” of its valuation, is expected to go from a profit of 50 cents per share during the same period last year to an operating loss per share of 9 cents.
It is anticipated that revenue will decline from $124.5 million to $122.4 million. Its largest business, product support, is predicted to witness a decline in revenue from $65.5 million to $61.8 million, product licenses to drop from $18.4 million to $12.4 million, and subscription services to increase from $21.5 million to $30.6 million.
