MicroStrategy shares rise after big earnings beat. Thank you Bitcoins Rally.
Micro strategy
,
a business intelligence and software group that has increasingly acted as a proxy for
Bitcoin
– of which it has a lot in its company coffers – crushed expectations for first quarter earnings. Investors can look to 2023’s crypto rally.
MicroStrategy (ticker: MSTR), founded by high-profile Bitcoin bull Michael Saylor — who is now chairman — reported earnings per share of $31.79 for the first three months of 2023 on revenue of $122 million. The group snapped a streak of eight consecutive quarters of losses per share to beat expectations for a loss of $1.28 per share, with revenue topping the $119 million estimate of analysts surveyed by FactSet.
Shares in MicroStrategy rose 2% in premarket trading on Tuesday. The stock has already risen almost 120% so far this year.
In the core business, software license revenue increased 23% year-over-year to $36.2 million, and subscription services revenue increased 46% year-over-year to $18.8 million.
But for MicroStrategy, it’s all about Bitcoin. The company has emerged, along with the likes of Tesla ( TSLA ) and Block ( SQ ), as one of the few publicly traded companies with significant cryptocurrency holdings. MicroStrategy in particular has emerged as a notable “whale” in crypto markets, with shares trading in tandem with Bitcoin prices.
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Bitcoin’s Rally in 2023 – The largest crypto has gained around 70% this year, dwarfing the 8.6% return in
S&P 500
stock index – has helped bolster MicroStrategy’s finances at a time when the group continues to double down on digital assets.
MicroStrategy reported a $19 million write-down on its digital asset holdings at the end of March—Bitcoin, it should be noted, remains well below its all-time high near $69,000 as of the end of 2021. That’s well down from a write-down of 198 million in the previous quarter, and a recovery from the write-down of $918 million in the second quarter of 2022, in the heat of the bear market.
“The conviction in our Bitcoin strategy remains strong as the digital asset environment continues to mature,” said Phong Le, MicroStrategy’s president and CEO.
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“In Q1, we strengthened our capital structure by reducing leverage by repaying our Bitcoin-backed loan,” added Andrew Kang, CFO.
The company continues to bet big on Bitcoin, increasing its holdings by 7,500 Bitcoins in the last quarter to a total net purchase amount of $179 million or just $24,000 per Bitcoin. The biggest digital asset traded above $28,000 on Tuesday. As of late March, MicroStrategy held 140,000 Bitcoins at a total cost of $4.2 billion, or about $29,800 per Bitcoin, still somewhat underwater in the current crypto market.
Write to Jack Denton at [email protected]
