MicroStrategy Stock Down 90% in 24 Hours, Here’s Why

by

As a seasoned crypto investor with a penchant for the unpredictable, I find myself standing at the precipice of yet another rollercoaster ride in the world of Bitcoin and MicroStrategy. The recent 10-for-1 stock split by MicroStrategy has left me somewhat perplexed, to say the least.

Over the course of a single day, the worth of MicroStrategy’s shares – one of the biggest corporate Bitcoin (BTC) owners – plummeted by approximately 90%. This decrease is attributed to the previously announced 10-for-1 stock split they will be implementing.

As of the current moment, I find myself observing that MicroStrategy’s stock is being transacted at approximately $124.69. This represents a significant decrease of over 81% compared to its year-to-date performance.

Bitcoin yet to recover

As a crypto investor, I’ve noticed that MicroStrategy’s stock split occurs at a time when the Bitcoin market has been quite volatile. Yesterday, Bitcoin experienced a slight increase of 0.5%, but its weekly performance shows a decline of more than 11%.

MicroStrategy, a company run by Michael Saylor who is both its chairman and co-founder, owns approximately 226,500 Bitcoins. They started buying Bitcoin in 2020 and have continued to do so since then. Recently, they managed to buy more Bitcoin using $700 million from investors for notes with a five-year maturity.

Currently, Bitcoin hasn’t surpassed its past peaks following its trading around $49,000 last week, which has negatively impacted MicroStrategy’s share price. At the moment, Bitcoin is being traded at approximately $57,389, and daily trading volume has dropped by 9.9% to about $39.9 billion.

Despite MicroStrategy providing various services, analysts posit that their investment in Bitcoin might influence the company’s stock price. Notably, well-known crypto critic Peter Schiff contends that MicroStrategy will have to liquidate its Bitcoin assets due to pressure from creditors. According to Schiff, this is likely because he considers Bitcoin to be worthless, predicting inevitable losses for the digital currency.

MicroStrategy’s efforts to boost liquidity

In spite of persistent difficulties, MicroStrategy has declared a 10-to-1 stock split as a means to enhance accessibility and ease of trading for its users. The stock split, which became effective on August 1st, will provide each holder of MSTR Class A shares with an additional nine shares of the same class.

Similarly, the distribution remains consistent for owners of Class B shares as well. MicroStrategy highlighted that the stock split won’t alter the voting rights of shareholders.

Read More

2024-08-08 19:16