MicroStrategy’s Software Business Is Profiting As Bitcoin Stash Appreciates

MicroStrategy
MSTR
It is a Bitcoin investment vehicle attached to a business software company.

Steady progress in the business analytics sector is looking to move customers from on-premises licensing programs to recurring internet-based subscriptions (known as the software-as-a-service model), gaining momentum for results. I should get it. To Joe Vafi, Managing Director of Canaccord Genuity. The business is relatively mature, but “high margins and very tenacious,” he adds.

Consensus data compiled by FactSet shows that revenue is expected to fall about 3% to $130 million in the fourth quarter, but the company lost $90 million a year ago to $10.7 million. We plan to report net income in dollars. Its last profit was in the final quarter of 2020, when it made $2.7 million.

On an adjusted basis used by Wall Street analysts, MicroStrategy is expected to earn 98.3 cents per share, according to Bloomberg data.

As far as investors are concerned, the software business is secondary to the company’s Bitcoin strategy. Basically it is to buy and hold top cryptocurrencies. Microstrategy sold his first part in December. That’s a tax reduction strategy that Q4 purchases outperformed. According to SEC filings, on Dec. 22 he liquidated 704 Bitcoins at an average price of $16,776, but two days later he bought back 810 Bitcoins at an average price of $16,845. He also revealed that in November and December he purchased 2,395 coins for $17,871 each.

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Los Angeles CPA Brian T. Stoner calculates that the tax sale, while not subject to the wash rule that denies deductions for immediate repurchases of securities, created a short-term capital loss of $770,880. may have been last year. It could be used to offset capital gains in 2022 or 2023, he said.

After the announced fourth quarter deal, MicroStrategy was left with 132,500 bitcoins, acquired on December 28th at an average price of $30,397, and is now valued at approximately $3.2 billion. With the cryptocurrency trading close to $24,000 today, and with all Q4 purchases profitable, the company may be profitable. He is looking to book some of the December losses on acquisitions that paid an average of $49,229 in 2021, Los Angeles tax attorney Steven Zhang said last year.

Given the stable nature of the business, MicroStrategy stock tends to trade in line with Bitcoin. The stock took him over $500 per share in late March, but then plummeted on cryptocurrency sales, ending the year at $141.57. It then recovered to $291 as Bitcoin rose from below $16,000 to its current price.

According to Canaccord Genuity, MicroStrategy not only trades in Bitcoin, but its holdings demand a premium. According to the company, reflecting the value of stocks as a substitute for Bitcoin without the hassle of establishing a cryptocurrency wallet and the security risks traditionally present with cryptocurrencies is attractive to retail investors. But we also believe institutional investors are using equities for strategy, something more sophisticated than just a buy-and-hold.

Canaccord noted that a buyer called Group One Trading has informed the SEC that it has acquired a 13.5% stake in MicroStrategy’s common stock. While this could have been achieved through derivatives rather than necessarily direct stock holdings, the relatively large open interest in options on stocks suggests that institutional investors are using the company as a proxy for Bitcoin in their trading tactics. I think it shows that you are using it.