Bitcoin News Today: MicroStrategy Posts $10 Billion Net Income as Bitcoin Gains Soar 13.2 Billion

MicroStrategy, led by Michael Saylor, has maintained a firm stance on its Bitcoin (BTC) strategy, dismissing concerns over holding a significant portion of the total BTC supply. The company currently holds 628,791 BTC, representing about 3% of the total supply. Saylor recently remarked on CNBC that owning 3% to 7% of Bitcoin is not excessive, citing BlackRock as an entity with a larger BTC stake [1]. If the 7% target is reached, the firm would be holding approximately 1.5 million BTC.

The firm’s aggressive BTC acquisition strategy has been supported by stock issuance and debt financing, leading to notable gains. During the second quarter of 2024, MicroStrategy reported a net income of $10 billion, its first profitable quarter after several consecutive losses [1]. Year-to-date, BTC-related gains have reached $13.2 billion. Despite these gains, the company has faced share dilution due to ongoing stock sales, which have contributed to a decline in its modified net asset value (mNAV), currently at 1.62x, down from a peak of 3.89x in November 2023 [1].

To mitigate further dilution, MicroStrategy has implemented a policy of selling shares only when the mNAV is above 2.5x. This approach has been praised by Wall Street analysts, including Matthew Sigel of VanEck, who labeled it as “best in class” for treasury management [1]. Looking ahead, the firm plans to focus on raising capital through yield-bearing preferred perpetual stocks, such as Stretch (STRC), to fund further BTC purchases. Saylor specifically highlighted Stretch as a preferred option, noting its variable yield and likening it to a “treasury BTC.”

In parallel, Saylor has positioned MicroStrategy’s common stock, MSTR, as a 2x leveraged BTC exposure vehicle. The company’s recent social media activity, including a post stating “MicroStrategy is misunderstood and undervalued $MSTR,” reflects confidence in its current valuation [1]. Benchmark analysts have echoed this sentiment, assigning a buy rating to MSTR with a price target of $705. They described the firm as evolving into a corporate treasury machine designed to generate Bitcoin-denominated returns and scale efficiently [1].

At the time of reporting, MSTR shares were valued at $366.63, down 8.7% during intra-day trading on August 1, 2024, while Bitcoin remained relatively stable, dropping only 2% over the same period [1]. Despite the recent stock decline, Saylor and analysts remain optimistic about the company’s long-term potential in the Bitcoin space.

Source:

[1] https://ambcrypto.com/strategy-owning-3-7-of-bitcoin-supply-is-not-too-much-michael-saylor/