Strategy (MSTR) Shares Are Up as the Company Bought the Dip and Added 6,556 Bitcoins to Its Holdings

Shares of Strategy (MSTR) are up amid a broader market selloff on news that the company has acquired more Bitcoin (BTC).

Shares of Strategy (MSTR) are up amid a broader market selloff on news that the company has acquired more Bitcoin (BTC).

Strategy, formerly known as MicroStrategy, filed a form 8-K with the U.S. Securities and Exchange Commission (SEC) showing that it bought 6,556 BTC at a cost of $555.8 million between April 14 and 20. Strategy used cash to purchase the new Bitcoin and paid about $84,785 for each digital token.

MSTR stock is up about 2% on news of the latest Bitcoin purchase. Strategy, a former software company turned serial Bitcoin acquirer, is the world’s largest corporate owner of BTC. The company now owns a total of 538,200 Bitcoins.

Based on the current price, Strategy’s BTC holdings are worth about $47 billion.

Founded as a software company in 1989, Strategy rebranded earlier this year and is today viewed as a proxy for Bitcoin. MSTR stock tends to move in tandem with the price of BTC. The company uses proceeds from its at-the-market programs to fund its ongoing Bitcoin purchases.

News of Strategy’s latest BTC purchase comes as the cryptocurrency’s price gains more than 3% in the past 24 hours to trade above $87,000 as stock markets around the world remain volatile. Bitcoin had been languishing near $80,000 in recent weeks but now it appears that many investors are moving back into cryptocurrencies as volatility in equity markets intensifies.

Most Wall Street firms don’t offer ratings or price targets on Bitcoin, so we’ll look at the cryptocurrency’s three-month performance instead. As one can see in the chart below, the price of BTC has declined 17.95% in the last 12 weeks.

Is BTC a Buy?

Despite the recent price pullback, several analysts believe that Bitcoin is still a good investment in 2023. Bitcoin is the world’s most popular cryptocurrency and it plays a crucial role in the emerging metaverse.

Earlier this year, Wolf Richter of WOLF STREET highlighted that MicroStrategy’s strategy to buy Bitcoin with cash at the peak of the stock market bubble and sell stock to raise cash for more Bitcoin might backfire on the company.

As of March 31, MicroStrategy’s shares were valued at $134.08, and the company had 119.6 million shares outstanding, bringing the total value to $16,000 million. However, the shares closed at $117.8 on Monday, April 17, and they were trading at $119.38 by 10:00 AM ET on Tuesday.

Moreover, at the beginning of 2022, MicroStrategy shares were trading at over $600, meaning that they have lost the majority of their value in the past 15 months.

Earlier this year, MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor said that he does not plan to sell any more of the company’s Bitcoin holdings even if the cryptocurrency falls to $130,000.

In an interview with Stansberry Research, Saylor said that he does not think it is likely that Bitcoin will fall to $130,000, but if it did, he would not sell any of the company’s coins.

MicroStrategy is one of the most bullish institutional investors in Bitcoin. The company began buying Bitcoin in 2019 and has since accumulated a total of 150,000 coins.

At the time of writing, MicroStrategy’s Bitcoin holdings are worth over $10 billion.

Saylor has been a vocal advocate for Bitcoin throughout the recent market downturn. He argues that Bitcoin is a superior hedge against inflation than traditional assets such as gold and real estate.

In addition, Saylor claims that MicroStrategy has no problems with respect to debt service.

According to Saylor, the company’s strategy is to continue buying Bitcoin in order to increase its treasury holdings. He added that MicroStrategy is capable of selling stock to raise cash for more Bitcoin.

However, Saylor’s bullish outlook on Bitcoin is not shared by all investors. Some analysts are concerned that MicroStrategy’s large Bitcoin wagers could leave it exposed to price volatility.

Despite these concerns, MicroStrategy remains committed to its Bitcoin strategy. The company believes that its investment in the cryptocurrency will pay off in the long term.