MicroStrategy’s stock is tied to the success or failure of Bitcoin

MicroStrategy CEO Michael Saylor speaks at the Bitcoin 2021 Convention. (Photo by Joe Raedle / Getty … [+] Images)

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MicroStrategy had a strategy last July of investing some of its cash flow and future cash flow in alternative assets like stocks, bonds, commodities, and digital assets like Bitcoin. At the time, it had a market cap of $ 1.15 billion, $ 421 million in cash, and planned to invest $ 250 million of that in alternative assets. What it turns out is a company that not only used the cash it generated, but also borrowed over $ 2 billion in debt to buy over 100,000 bitcoins for more than $ 2.7 billion.

The company’s market cap increased from $ 1.15 billion as of June 30 last year to $ 6.5 billion a year later. Below is a timeline of MicroStrategy’s announcements and share prices over the past year.

MicroStrategy pricing chart

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It started in July 2020

When MicroStrategy released its quarterly results for June 2020 on July 28, it announced a new capital allocation strategy. It states: “With more than $ 500 million in cash and cash equivalents and short-term investments, and an operating plan with significant free cash flow for the future, MicroStrategy intends to raise up to $ 250 million in its over the next 12 months To return shareholders. In addition, as part of this capital allocation strategy, MicroStrategy will seek to invest up to an additional $ 250 million in one or more alternative investments or assets over the next 12 months, which may include stocks, bonds, commodities like gold, digital assets like Bitcoin, or other asset types. Both strategies will depend on market conditions. “

MicroStrategy and Bitcoin Pricing:

  • July 27, 2020: $ 117.66 Bitcoin: $ 10,990
  • July 28, 2020: $ 117.81 Bitcoin: $ 10,912
  • July 29, 2020: $ 122.74 Bitcoin: $ 11,100

Bitcoin as the primary treasury reserve asset

On August 11, 2020, the company announced that it had purchased 21,454 bitcoins for a total purchase price of $ 250 million, including fees and expenses. That was $ 11,653 per bitcoin.

MicroStrategy and Bitcoin Pricing:

  • August 10, 2020: $ 123.62 Bitcoin: $ 11,878
  • August 11, 2020: $ 134.89 Bitcoin: $ 11,410
  • August 12, 2020: $ 137.04 Bitcoin: $ 11,584

The original target of $ 250 million has been exceeded

On October 27, 2020, MicroStrategy announced it had purchased $ 425 million in bitcoins in the September quarter. MicroStrategy CEO Michael Saylor said, “Our recent decision to make Bitcoin our primary treasury reserve is the latest example of MicroStrategy’s use of virtual technology. The $ 425 million purchase of Bitcoin during the quarter offers investors the opportunity for greater potential returns than holding such balances in cash and has increased MicroStrategy’s overall visibility in the marketplace. “

The company spent about $ 11,111 on its bitcoins, which were underwater on September 30th, but bitcoin rebounded and on October 27th, the company’s stocks were in positive territory.

MicroStrategy and Bitcoin Pricing:

  • October 26, 2020: $ 175.00 Bitcoin: $ 13,075
  • October 27, 2020: $ 175.58 Bitcoin: $ 13,654
  • October 28, 2020: $ 162.15 Bitcoin: $ 13,271

02/25/21 MicroStrategy buys more than $ 1 billion worth of Bitcoin. Photo by: STRF / STAR MAX / IPx 2021

STRF / STAR MAX / IPx

Convertible bonds to buy Bitcoin

On December 7, 2020, the company announced that it would issue $ 400 million convertible debt to buy bitcoins. Four days later, it announced that it had raised $ 650 million with a maturity in 2025 at an interest rate of 0.75% and an initial conversion rate of $ 397.99 per share.

MicroStrategy and Bitcoin Pricing:

  • December 7, 2020: $ 336.22 Bitcoin: $ 19,191
  • December 8, 2020: $ 289.45 Bitcoin: $ 18,321
  • December 9, 2020: $ 286.21 Bitcoin: $ 18,553
  • December 10, 2020: $ 290.33 Bitcoin: $ 18,264
  • December 11, 2020: $ 285.92 Bitcoin: $ 18,058

Over $ 1 billion in Bitcoin

On December 21, 2020, the company announced “that it has an additional approximately 29,646 bitcoins for approximately $ 650 million in cash at an average price of approximately $ 21,925 per bitcoin, including fees and expenses, in accordance with its Treasury Reserve Policy bought. As of December 31, 2020, the company holds a total of approximately 70,470 bitcoins, which were purchased for a total purchase price of approximately $ 1.125 billion and an average purchase price of approximately $ 15,964 per bitcoin including fees and expenses.

MicroStrategy and Bitcoin Pricing:

  • December 20, 2020: $ 301.20 Bitcoin: $ 23,477
  • December 21, 2020: $ 317.60 Bitcoin: $ 22,803
  • December 22, 2020: $ 331.50 Bitcoin: $ 23,783

Metallic bitcoin symbol with financial graph

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100% made with his bitcoins

In its December quarterly results released on January 28th of this year, the company said, “We continue to plan to hold our Bitcoin and invest additional excess cash flows in Bitcoin. In addition, we will examine various approaches for acquiring additional bitcoins as part of our overall corporate strategy. “

This was likely because MicroStrategy doubled the value of the bitcoins it bought. As of December 31, 2020, 70,784 bitcoins to buy cost an average of $ 15,964. As you can see below, Bitcoin was over $ 30,000 when the company announced its results.

MicroStrategy and Bitcoin Pricing:

  • January 27, 2021: $ 540.10 Bitcoin: $ 30,432
  • January 28, 2021: $ 578.38 Bitcoin: $ 31,649
  • January 29, 2021: $ 617.31 Bitcoin: $ 34,316

Raised over $ 1 billion to buy bitcoins

On February 16, the company announced that it would issue a $ 600 million convertible bond. Three days later, it announced that it had raised $ 1.05 billion due in 2027 with an initial conversion price of $ 1,432.46 per share.

MicroStrategy and Bitcoin Pricing:

  • February 16, 2021: $ 955.00 Bitcoin: $ 49,199
  • February 17, 2020: $ 941.80 Bitcoin: $ 52,149
  • February 18, 2021: $ 927.78 Bitcoin: $ 51,679
  • February 19, 2021: $ 963.72 Bitcoin: $ 55,888

Bitcoin price chart

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Pay over $ 1 billion for more bitcoins

On February 24, the company announced that it had spent the money it had just raised and used $ 1.026 billion on 19,452 bitcoins. That was $ 52,765 per bitcoin, increasing to 90,351 bitcoins for $ 2.171 billion.

Michael J. Saylor, CEO of MicroStrategy, said, “The company now holds over 90,000 bitcoins, reaffirming our belief that bitcoin, the world’s most widely used cryptocurrency, can serve as a reliable store of value. We will continue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, spend debt or equity in fundraising transactions with the aim of using the proceeds to purchase additional bitcoins. “

MicroStrategy and Bitcoin Pricing:

  • February 23, 2021: $ 691.23 Bitcoin: $ 48,824
  • February 24, 2021: $ 817.69 Bitcoin: $ 49,705
  • February 25, 2021: $ 731.61 Bitcoin: $ 47,093

Forgives $ 500 million in debt

On June 14, the company announced that it had borrowed $ 500 million in Bitcoin at an interest rate of 6.125% due in 2028. “

MicroStrategy and Bitcoin Pricing:

  • June 13, 2021: $ 516.44 Bitcoin: $ 39,097
  • June 14, 2021: $ 598.49 Bitcoin: $ 40,218
  • June 15, 2021: $ 630.54 Bitcoin: $ 40,406

Owns over 105,000 bitcoins

When Bitcoin price fell, MicroStrategy announced on June 21 that it had bought approximately 13,005 bitcoins for $ 489 million, or $ 37,617 per bitcoin. The company has now received around 105,085 bitcoins at an average purchase price of $ 26,080.

MicroStrategy and Bitcoin Pricing:

  • June 20, 2021: $ 646.46 Bitcoin: $ 35,698
  • June 21, 2021: $ 583.67 Bitcoin: $ 31,676
  • June 22, 2021: $ 553.72 Bitcoin: $ 32,505

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