Vong Lo, the company’s president, will take over as CEO.
MicroStrategy reported quarterly results that came in light of Wall Street estimates Tuesday, with revenue of $122.1 million versus expectations of $126 million. Total losses in the first quarter were $918.1 million, of which $917.8 million was attributable to the company’s bitcoin holdings.
In a statement, MicroStrategy said that Saylor will focus primarily on “innovation and the company’s long-term strategy, while continuing to oversee the company’s bitcoin acquisition strategy.”
“As CEO, I will be able to focus more on our bitcoin acquisition strategy and related bitcoin advocacy initiatives, while Phong will be empowered as CEO to manage the company’s overall operations,” Saylor said in a statement.
At the end of the second quarter, MicroStrategy’s digital assets (comprising approximately 129,699 Bitcoins) had a book value of $1.988 billion, reflecting a cumulative impairment loss of $1.989 billion since the acquisition and an average book value of about $15,326 per bitcoin, according to the report. The company said in a statement.
The original cost basis and market capitalization of Bitcoin MicroStrategy were $3.977 billion and $2.451 billion, respectively, reflecting the average cost of bitcoin at around $30664 and the market price per bitcoin of $18895.02, respectively.
Although it does not reflect the current value of the company’s investment in bitcoin, the drop provides the latest evidence of just how volatile the cryptocurrency market can be for the largest known bitcoin holder.
As of Tuesday afternoon, bitcoin’s price has recovered 23% from its low of $17,708 per coin on June 17 even though it is still 51% below the year to date.
Since buying bitcoin for the first time during the third quarter of 2020, MicroStrategy has invested more than $4 billion in the cryptocurrency. To do this, they are issued corporate debt, convertible bonds, issued shares, and take out a loan with some of their bitcoins.
MicroStrategy’s shares were little changed in after-hours trading following this announcement. During Tuesday’s close, the stock gained more than 60% Over the past month, yet still down nearly 50% year to date.
And the fees related to the company’s position in bitcoin also don’t tell the whole story of the company according to Mark Palmer, an analyst at BTIG who calls it “accounting noise.”
Based on Generally Accepted Accounting Principles (GAAP), MicroStrategy must account for its bitcoin purchases by recording its initial cost and flagging it low if the bitcoin goes down in value.
Under these rules, the value of bitcoin cannot be reported from the lowest to the end of the quarter unless the asset is sold, so the impairment fee reflects the lowest value of bitcoin during the previous quarter, not its market value at the end of the second quarter.
“The reality is that the overwhelming driver, the value of MicroStrategy, is the company’s holdings of Bitcoin. The driver of that, of course, is the price of Bitcoin at any given time,” Ballmer added.
Since the value of Bitcoin began declining in May, investors have sold MSTR shares short at an increasing pace. Between May and July 14, the volume of short sold MSTR shares increased by 1.19 million from 2.4 to 3.6 million shares, reaching a notional value of more than $1 billion in sales according to Yahoo Finance. data.
“Our people and our brand have incredible momentum. I want to reinforce our commitment to our customers, shareholders, partners, and employees, and look forward to leading the organization for the long-term health and growth of our foundation’s programs and bitcoin acquisitions,” he told me in the release.
At current market prices, the company’s total cryptocurrency investment has a total market capitalization of $2.9 billion.
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