MicroStrategy Considers Increasing Bitcoin Bets
MicroStrategy, a software company, is considering increasing its leveraged bets on Bitcoin. This strategy has already inflated its Bitcoin holdings to over $14 billion.
During the first quarter earnings call, MicroStrategy executives championed an “intelligent leverage” approach to acquiring more Bitcoin. The company's CEO, Phong Le, suggested that if the market value of their Bitcoin increases, it would create more opportunities to manage their leverage targets.
MicroStrategy's unconventional strategy involves issuing billions in debt and equity to acquire more Bitcoin whenever prices dip. The company, a strong believer in Bitcoin's long-term potential, held about 214,400 Bitcoins worth $14 billion as of late April. This follows their deployment of $1.6 billion in cash raised from recent debt and stock offerings to purchase over 25,000 more coins in the first quarter.
Despite Bitcoin's 60% surge in 2024, MicroStrategy's leveraged approach has drawn criticism from analysts concerned about the company's heightened risk exposure should prices crash again.
MicroStrategy offered illustrations showing how leverage could boost investor returns exponentially if Bitcoin prices were to theoretically reach $250,000. This underscores the company's conviction in its debt-fueled acquisition strategy.
Executive Chairman Michael Saylor claimed the company's corporate structure and access to capital markets give it a strategic edge over other firms in accumulating Bitcoin.
"We are a public company and an operating company, and that gives us flexible, active control over our capital structure," Saylor stated on the call. "We wouldn’t have been able to raise as much capital without volatility."
MicroStrategy reported its first-quarter financial results, which showed a 5.51% decrease in sales year-over-year. Despite this, the company's Bitcoin holdings have continued to grow.
Saylor has previously highlighted the unique advantages that MicroStrategy has over its competitors, such as the ability to leverage its stock, offer options, and issue convertible debt.
MicroStrategy shares are down 2.63% after-hours at $1,259 at the time of publication.