MicroStrategy Shares Drop 8% Following Latest $209M Bitcoin Purchase
MicroStrategy (MSTR) saw its shares fall over 8% after disclosing its latest Bitcoin acquisition worth $209 million on December 30. The drop has sparked concerns among investors regarding the company’s leveraged strategy and its heavy reliance on Bitcoin holdings.
Market Reaction to MicroStrategy’s Bitcoin Buy
MicroStrategy’s stock opened the trading session on the Nasdaq Stock Exchange at $318.89 but quickly dropped 5.3% to $302.09 within the first hour. Despite a slight recovery to $302.96 by the end of the session, the stock slid another 3.19% in after-hours trading, closing at $293.59, according to Google Finance data.
The purchase was funded by selling 592,987 shares earlier in the week, reflecting the company’s commitment to growing its Bitcoin reserves despite mounting concerns about its leveraged strategy.
Eight Straight Weeks of Bitcoin Accumulation
MicroStrategy’s latest acquisition marks its eighth consecutive week of Bitcoin purchases, bringing its total holdings to 194,180 BTC as of December 30. The firm has consistently added to its Bitcoin portfolio since October 31, demonstrating its long-term vision for Bitcoin adoption as a store of value.
Concerns Over Leverage and Dilution Risks
Market analysts have expressed mixed reactions to MicroStrategy’s approach. Trading platform The Kobeissi Letter raised alarms about the company’s plan to increase authorized shares from 330 million to 10.33 billion—a move viewed as potentially dilutive to shareholders.
Kobeissi highlighted that MicroStrategy’s reliance on convertible notes and debt issuances leaves it in a “lose-lose” scenario for now. The company may need to issue more debt or equity to sustain its Bitcoin buying spree, heightening the risks associated with over-leverage.
MicroStrategy’s High-Risk, High-Reward Approach
Despite the concerns, MicroStrategy’s stock has surged 342.2% year-to-date, even with a 20.2% decline over the past 30 days.
Felix Hartmann, founder of Hartmann Capital, predicted in a December 30 post on X that MicroStrategy could either implode or soar in the coming years.
“Within five years, MSTR could become a top 5 company by market cap before eventually going bankrupt,” Hartmann stated. However, he also acknowledged that a bull market could allow MicroStrategy to leverage up further and easily manage its debt maturities due in 2027–2029 if Bitcoin prices continue to climb.
MicroStrategy’s “Hyperbitcoinization” Strategy
Joe Burnett, head of market research at Unchained, described MicroStrategy’s aggressive accumulation as “hyperbitcoinization.”
Burnett explained that the company’s premium valuation allows it to issue shares above net asset value (NAV), acquire more Bitcoin, and use leverage to enhance its BTC-per-share ratio.
“MicroStrategy’s premium valuation lets them sell shares, reduce leverage, and buy more Bitcoin—repeating the cycle to boost Bitcoin-per-share,” Burnett added.
MicroStrategy Joins the Nasdaq-100 Index
On December 23, MicroStrategy was officially added to the Nasdaq-100 Index, solidifying its position among the 100 largest stocks by market capitalization listed on Nasdaq.
The company joined the index alongside Palantir Technologies (PLTR) and Axon Enterprise (AXON), according to a December 13 statement by Nasdaq.
Final Thoughts: A Bold but Risky Bitcoin Bet
MicroStrategy’s aggressive Bitcoin acquisition strategy continues to attract both admiration and skepticism. While its inclusion in the Nasdaq-100 Index underscores its market significance, concerns about over-leverage and share dilution persist.
With Bitcoin prices surging in 2024, MicroStrategy’s bet on hyperbitcoinization could deliver massive returns—or expose the company to substantial financial risk. Investors remain divided, closely monitoring how this bold strategy plays out in the evolving crypto landscape.
