Drop in shares
At the end of trading on Tuesday, 8 December, MicroStrategy Inc. shares fell 13.9% in price. Active sales were driven by plans to issue $400 million worth of convertible bonds to increase bitcoin positions.
The investment bank noted an "excessive" rally of MicroStrategy shares and increased sales by insiders. According to experts, this raises doubts about the success of the announced strategy to invest the company's reserves in bitcoin by Michael Saylor, CEO of MicroStrategy.
Experts suggested that the bond issue plans may have been the "last straw" for investors. The increased focus of the MicroStrategy CEO on the first cryptovoltaic currency could weaken the focus on the company's operational activities and worsen the psychological climate of the team.
Simultaneously with the downgrade, Citi analysts raised the fair value of MicroStrategy shares from $200 to $250. The valuation is based on a bitcoin price of $19,200.
At the close of trading on Tuesday, the company's shares could be purchased for $289.45. Since the disclosure of the first $250 million (21,454 BTC) purchase of bitcoin on 11 August, MicroStrategy shares have risen by 134.15% to date. The first cryptovoltaic currency in the same period rose 53.9%.
In September, the company acquired an additional 16,796 BTC for $175 million. Early in December, MicroStrategy made its third Bitcoin investment of $50 million (2574 BTC).
According to Bitcoin Treasuries, the value of the cryptocurrency that the analytical software provider purchased this year increased from $475 million to $742.4 million. Current position profit is 7.8 times the net operating profit for the previous year.
It is known that in November Citibank allowed the bitcoin to grow to $318,315 if the cryptovrency manages to establish itself as digital gold in the 21st century.