MicroStrategy, the largest corporate investor in bitcoin, has raised over $1.5 billion in the first quarter and used it to buy more bitcoin (BTC).
The software company now owns 214,400 BTC, valued at around $13.6 billion. MicroStrategy’s bitcoin holding is almost 1% of the total circulating supply of 19.7 million tokens. This strategy provides a scarcity value, making it a good option for equity investors to get exposure to the digital asset.
On the operational side, the company’s business is moving to the cloud, which helped it achieve double-digit subscription services revenue growth in the first quarter. However, it reported a net operating loss of $53.1 million after a digital asset impairment charge of $191.6 million.
Brokerage firm Canaccord cut MicroStrategy’s price target to $1,590 from $1,810 but kept its buy rating. MicroStrategy’s stock fell 2.5% to $1,261 in after-hours trading.
MicroStrategy chose not to adopt the new digital asset fair value accounting standard, which could have shown a large profit due to the rise in bitcoin’s value in the first quarter.
Short sellers betting against MicroStrategy (MSTR.O) lost $1.92 billion since March as the stock rally was supported by the growing mainstream acceptance of bitcoin.
In addition to MicroStrategy’s losses, traders shorting other key players in the cryptocurrency market, such as Coinbase (COIN.O) and bitcoin miner CleanSpark (CLSK.O), also faced substantial losses, totaling $593.50 million and $106.40 million, respectively.
MicroStrategy’s stock premium is largely driven by investors seeking bitcoin exposure, particularly those who find it difficult to invest directly in the cryptocurrency or its ETFs.
Since Saylor’s initial investment in Bitcoin in 2020, the cryptocurrency’s value has soared by 675%, contributing to a remarkable surge in MicroStrategy’s stock price.
Short selling is the practice of selling borrowed shares with the hope of repurchasing them at a lower price to pocket the difference. It continues to be a prevalent strategy in the crypto market despite recent losses experienced by those betting against its leading companies.
