MicroStrategy Buys Another 27,200 Bitcoins, Stock Soars 19%!

MicroStrategy Buys Another 27,200 Bitcoins, Stock Soars 19%!On Monday, MicroStrategy, a publicly listed company, announced the purchase of another 27,200 Bitcoins, the largest bitcoin purchase for the company since December 2020. The transaction totaled approximately $2

MicroStrategy Buys Another 27,200 Bitcoins, Stock Soars 19%!

On Monday, MicroStrategy, a publicly listed company, announced the purchase of another 27,200 Bitcoins, the largest bitcoin purchase for the company since December 2020. The transaction totaled approximately $2.03 billion, with an average purchase price of $74,463 per coin.

MicroStrategy raised funds for this purchase through a stock offering from October 31 to November 10. It's noteworthy that this purchase coincided with positive news for the cryptocurrency market sparked by the "Trump trade" after the US election. Bitcoin prices hit a historic high on Monday, breaking through $85,000.

MicroStrategy's transaction resulted in a double win: Firstly, with the significant rise in Bitcoin prices, the company already made a net profit of over $270 million at the time of the announcement. Secondly, driven by this news, MicroStrategys stock price surged by 19% after the market opened, just slightly lower than its all-time high in March 2000 during the dot-com bubble.

Since August 2020, MicroStrategy's stock price has surged over 26 times, becoming the highest-performing major US stock during the same period. During this time, Bitcoin's price also rose from just over $10,000 to $85,000.

As the origin of this phenomenal US stock, Michael Saylor, co-founder and chairman of the company, initiated the first $250 million Bitcoin purchase in August 2020, citing inflation hedge as the reason. However, today, the company has become a "Bitcoin fund with a US stock shell."

Initially, MicroStrategy bought Bitcoin using cash reserves, but later leveraged new stock issuance and convertible bonds to purchase large amounts. Late last month, Saylor announced an ambitious fundraising planto raise $42 billion in total through stocks and bonds over the next three years, all of which will be dedicated to purchasing Bitcoin.

According to the company's report, as of November 10, 2024, the company and its subsidiaries hold approximately 279,420 Bitcoin, with a total purchase price of $11.9 billion, resulting in an average purchase price of $42,692 per Bitcoin. At a price of $84,000, the latest value of these Bitcoins is estimated at $23.4 billion. The company also disclosed that its total Bitcoin return for the year reached 26.4%.

This move by MicroStrategy makes it the second-largest publicly listed company in the US market holding Bitcoin, following BlackRock's flagship Bitcoin fund (IBIT). It's worth mentioning that with the recent surge in Bitcoin prices in the past week, BlackRock's Bitcoin fund has surpassed the asset management giant's flagship gold fund.

MicroStrategy's continuous investment in Bitcoin undoubtedly demonstrates its unwavering confidence in this digital asset. With the continuous rise in Bitcoin prices, MicroStrategy's stock price has also soared, becoming a dark horse in the US stock market. However, investors need to be aware of the significant volatility of the Bitcoin market and the risks associated with MicroStrategy's investment strategy.