MicroStrategy Loses 16% Value Despite Records in Bitcoin

Bitcoin development company MicroStrategy (MSTR) suffered a double-digit percentage loss even as the price of bitcoin (BTC) rose to a new record high just below $100,000.

MicroStrategy, which at one point lost more than 20% of its value, closed the session down 16.2%. However, this move remained only a minor blow when looking at the long-term chart. The company’s shares have increased more than fivefold in 2024, an eightfold improvement over the previous year.

According to Citron Research’s Andrew Left, “MicroStrategy’s valuation has completely decoupled from bitcoin fundamentals.” Left, a former stock bull who four years ago advised investors that they could invest long-term in bitcoin by purchasing MicroStrategy, said he remains bullish on BTC but hedged by selling MSTR.

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MicroStrategy’s market value exceeded $100 million on Wednesday and Thursday. This means that the approximately 331,000 bitcoins on its balance sheet have more than tripled in value (at the current price of around $98,000, its assets are equivalent to $32.5 million). However, with today’s price drop, MicroStrategy’s market value has fallen to approximately $80 million.

Writing in the WSJ’s Heard on the Street column, Jonathan Weil noted the positive flywheel effect that has given the stock a significant boost recently. A rise in the stock allows the company to raise capital and purchase bitcoin at favorable prices. In short, bitcoin is rising, the stock is moving higher, Chief Executive Michael Saylor and his team are buying even more bitcoin.

According to Weil, “If you think Bitcoin will rise further, continue your purchases. Investing in shares of MicroStrategy is like betting that the strangely inefficient market will become even more inefficient.”