As a seasoned analyst with years of experience in the tech and crypto markets, I must say that MicroStrategy’s recent earnings miss has left me somewhat concerned but also intrigued. The company’s pivot to become a “Bitcoin development company” is indeed revolutionary, and the impressive growth they have achieved since August 2020, outperforming other tech giants like Nvidia, is commendable.
MicroStrategy’s shares dipped approximately 5.9% following the company’s Q3 earnings that were just shy of forecasted expectations, and a financial analyst cautions more turbulence may lie ahead for the stock post-US election.
Based on a report released on October 30th by MicroStrategy, the company’s Q4 2023 revenue was $116.1 million, which represents a decrease of about 10.3% compared to the same quarter in 2023. This figure is approximately 5.22% lower than what analysts had predicted.
It was also noted that during the quarter, the firm achieved a 5.1% return on its Bitcoin (BTC) holdings, alongside an overall gross profit of $81.7 million, representing a 70.4% gross margin.
This comes as the firm has been rebranding itself as a “Bitcoin development company” this year.
MSTR plunges as earnings miss analysts’ mark
On October 30, I experienced a dip in my MicroStrategy shares as they dropped around 4.23%, ending the day at $247.31.
During extended trading hours, the stock’s value decreased by an additional 1.75%. As per Google Finance, it is now valued at approximately $242.99.
As a proud crypto investor, I’ve been impressed by MicroStrategy’s stellar performance compared to tech giants like Nvidia and Tesla since last August. To put it into perspective, while Nvidia has seen impressive growth of 1,165%, MicroStrategy has outshone them all with a staggering 1,989% growth! This just goes to show the potential and power of our investment in this innovative company.
Other tech companies yet to embrace ‘digital capital’
In simpler terms, Saylor argued that while these firms are excellent in their respective fields, they have yet to fully adopt digital financial resources.
Although he acknowledged that Nvidia’s approach is harder to imitate, MicroStrategy’s method is easier to duplicate, as the company has been openly sharing its strategy (referred to as a “playbook”) and plans to continue doing so.
As a crypto investor, I see MicroStrategy not merely as a company that made a timely investment; rather, it symbolizes the onset of a significant wave in the digital transformation of wealth.
“Bitcoin is digital capital, and in time, dozens of companies will realize this, then hundreds, then thousands.”
MicroStrategy may see price volatility around US election
Yet, network economist Timothy Peterson cautions that the stock price could encounter extra challenges if Bitcoin experiences a downturn following the U.S. presidential election on November 5th.
According to Peterson’s prediction, considering MicroStrategy’s strong connection between its stock price and Bitcoin, a decrease in Bitcoin prices following the election might result in a significantly larger drop in the company’s share price as well.
As an analyst, I posit that should Bitcoin experience a crash following the election, it’s plausible that MicroStrategy’s (MSTR) share price could drop by roughly twice or thrice as much due to its significant correlation with Bitcoin.
According to Peterson, the increased exposure to Bitcoin‘s fluctuations magnifies potential losses during market declines, resulting in Mastercard (MSTR) losing more value compared to Bitcoin itself when the market experiences a downturn.
If Bitcoin manages to exceed its previous record high of $73,679 (which it’s currently only 1.7% away from at the current trading price of $72,432), Peterson suggests that MicroStrategy (MSTR) could potentially rise as it provides an indirect investment opportunity for those seeking Bitcoin exposure.
Simultaneously, the company disclosed its plans to gather approximately $42 billion within the next three years for the purpose of purchasing additional Bitcoins, according to their announcement.
Under the name “21/21 plan,” we’re looking at an investment strategy involving $21 billion in stocks and $21 billion in bonds over a period of three years.
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2024-10-31 09:20