Highlights:
- MicroStrategy plans to raise $42 billion to buy more Bitcoin and improve yield.
- The company reported a year-to-date BTC yield of 17.8%, targeting 6%-10% annually.
- MicroStrategy’s holdings represent 1.2% of Bitcoin’s total supply, making it a top holder.
MicroStrategy (ticker: MSTR), the business intelligence firm that has shifted to Bitcoin trading, announced its third-quarter financial results on Wednesday. The company plans to raise $42 billion over the next three years to purchase more Bitcoin and enhance “BTC yield” for its shareholders. MicroStrategy noted that the “21/21 Plan” aims to raise $21 billion through At-the-Market (ATM) equity offerings and another $21 billion in fixed-income securities.
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MicroStrategy announces $42 billion capital plan including $21 billion ATM equity offering and a target of raising $21 billion in fixed-income securities. Join us at 5pm ET as we discuss our quarterly results and #Bitcoin Treasury Company plans. $MSTR https://t.co/eXYELbN1Dm
— Michael Saylor⚡️ (@saylor) October 30, 2024
MicroStrategy’s Bold Move as a Bitcoin Treasury Company
MicroStrategy called itself a ‘Bitcoin Treasury Company’ and announced that part of this capital will be used to purchase more BTC as a treasury reserve asset. MicroStrategy’s President and CEO, Phong Le, explained that this move aims to enhance the firm’s returns from its Bitcoin holdings. The company reported a current year-to-date BTC yield of “17.8%,” with plans to reach an annual BTC yield of 6% to 10% from 2025 to 2027.
Phong stated:
“As a Bitcoin Treasury Company, we plan to use the additional capital to buy more Bitcoin as a treasury reserve asset in a manner that will allow us to achieve higher BTC Yield.”
This plan will greatly boost the Bitcoin price due to the buying pressure from the software company’s BTC purchases. The company currently holds 252,220 BTC, worth $6.851 billion. It purchased these bitcoins at an average cost of $39,266 each.
The company’s BTC holdings account for 1.2% of Bitcoin’s total supply. This makes it the fifth-largest holder, behind Satoshi Nakamoto, Binance, Blackrock, and Grayscale. MicroStrategy has clearly benefited from its Bitcoin strategy. MSTR stock has become one of the best-performing assets.
How the MicroStrategy Performed in Q3
For Q3 2024, MicroStrategy reported total revenue of $116.1 million, representing a 10.3% decline year-over-year. Revenue from subscription services increased by 32.5% to $27.8 million. In contrast, revenue from product licenses and subscription services dropped by 13.6% to $38.9 million, while product support revenue fell by 8.7% to $61.0 million.
Additionally, revenue from other services decreased by 8% to $16.2 million. Gross profit was $81.7 million, with a gross margin of 70.4%, down from $102.8 million and 79.4% in Q3 2023. Operating expenses rose by 301.6% year-over-year to $514.3 million, mainly due to impairment losses on digital assets totaling $412.1 million. The company reported an operating loss of $432.6 million, compared to a loss of $25.2 million a year earlier.
Additionally, the net loss amounted to $340.2 million, or $1.72 per diluted share, compared to a net loss of $143.4 million, or $1.01 per diluted share, in Q3 2023. Cash and cash equivalents totaled $46.3 million at the end of Q3, a decrease of $0.5 million from December 31, 2023.
Analysts expected a 6.2% revenue drop to $121.5 million and an adjusted loss of $0.02 per share, which differed from MicroStrategy’s reported results. As a result, MSTR stock fell 6.62% to $230.95 in after-hours trading on Wednesday.
Market Reactions to MicroStrategy’s Bold Bitcoin Strategy
Crypto commentator, BitcoinMiningStockGuy expressed being “bullish” on the news. He noted that $21 billion is comparable to the total market cap of all public miners. Meanwhile, quant volatility researcher Ryan McGinnis described the plan as “escape velocity.” He stated that the real question is how much MSTR will outpace every other public company and even countries.
“But, what if, another operating company comes along and buys more bitcoin than MSTR?”
It’s over. This is escape velocity. The only question is how wide will the gap be between $MSTR, every other PubCo on Earth combined, and even countries. https://t.co/ltJdiIPdTr
— Ryan (@ryQuant) October 30, 2024
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