MicroStrategy Holds $13.4B in Bitcoin: Is It Too Late to Invest in MSTR Stock

MicroStrategy (NASDAQ: MSTR) has seen its stock double in 2024 and triple over the past year, thanks to its aggressive Bitcoin (CRYPTO: BTC) investment strategy.

The company now holds 226,500 Bitcoins, valued at approximately $13.4 billion at current prices. With only $67 million in cash equivalents, nearly all of MicroStrategy’s liquid assets have been converted into Bitcoin.

The company has been financing these purchases by reinvesting cash flows from its software business, taking on new debt, and issuing new stock to fund additional cryptocurrency acquisitions.

MicroStrategy CEO Phong Le highlighted this strategy in the company’s second-quarter earnings call, stating, “Our goal is to accumulate Bitcoin faster than we issue shares.”

This approach has transformed MicroStrategy from a traditional enterprise software firm into a major player in the cryptocurrency market.

A Leveraged Bet on Bitcoin’s Future

MicroStrategy’s bold approach effectively makes it a leveraged play on Bitcoin’s future. During the same earnings call, co-founder and executive chairman Michael Saylor described the company as a more dynamic and ambitious alternative to spot Bitcoin exchange-traded funds (ETFs).

Unlike ETFs that merely mirror Bitcoin’s performance, MicroStrategy aims to outperform by actively adding more capital to its Bitcoin holdings.

If Bitcoin doesn't increase by +40-50% YoY in terms of USD for the next 15 to 20 years,

The asset will have failed as the greatest SoV.

That is the simple bet/thesis that you have to make.

Lets start with a value of 80k,

1.… pic.twitter.com/zgo88IfrLv

— MDB (@MDBitcoin) August 15, 2024

“The key for us to outperform is to responsibly use that capital and our operational flexibility,” Saylor explained.

While this strategy offers the potential for significant gains if Bitcoin’s value rises, it also comes with heightened risks. MicroStrategy’s stock could experience amplified losses during downturns in the cryptocurrency market.

Is It Still a Good Time to Buy MicroStrategy?

For investors who believe in the long-term growth of Bitcoin, MicroStrategy presents an intriguing, albeit risky, investment opportunity.

The company’s stock tends to magnify Bitcoin’s price movements, offering substantial upside if Bitcoin continues to appreciate.

However, this also means that MicroStrategy could face severe challenges during prolonged bear markets in the cryptocurrency sector.

Therefore, it may not be too late to invest in MicroStrategy, especially if you are confident in Bitcoin’s future growth.

Just be aware of the risks involved, as the company’s stock is highly correlated with the volatile nature of Bitcoin prices.