MicroStrategy Misses Chance for S&P 500 Inclusion, Reports Q1 2024 Losses

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As a researcher with experience in studying the financial performance of tech companies and their adoption of digital assets, I find MicroStrategy’s Q1 2024 results intriguing. The company reported a net loss due to a significant impairment loss on its Bitcoin holdings and a decline in revenue compared to the previous year. However, it’s important to note that MicroStrategy hasn’t yet adopted the new digital asset fair value accounting standard, which would have significantly increased the carrying value of their Bitcoin holdings.

In the Q1 2024 financial report released on April 29, MicroStrategy disclosed a net loss amounting to $53 million. The company also announced a significant digital asset impairment loss of $191.6 million during this quarter, representing a tenfold increase compared to the same timeframe in the previous year.

Compared to the first quarter of 2023, MicroStrategy’s revenue decreased by 5.5% in the first quarter of 2024, amounting to $11.52 million. However, it’s important to note that the company hasn’t implemented the new digital asset fair value accounting standard as of yet. Had they done so, the significant 65% increase in Bitcoin‘s price during Q1 2024 would have positively impacted their revenue figures.

Using new accounting standards and a fair value approach, MicroStrategy’s Bitcoin holdings were valued at approximately $15.2 billion, representing a significant increase from their carrying value of $5.07 million at a Bitcoin price of $23,680 under traditional methods.

According to Benchmark’s recent report, many businesses holding Bitcoin have opted to apply the new ASU 2023-08 accounting standard ahead of schedule. To be considered for addition to the S&P 500 index, a company must exhibit positive earnings in its most recent quarter. Unfortunately, MicroStrategy fell short of this requirement as they reported net losses during Q1 2024.

MicroStrategy Buys More Bitcoins

On Monday, MicroStrategy’s Executive Chairman Michael Saylor revealed that the firm bought an extra stash of 122 Bitcoins for approximately $7.8 million in April. With this latest acquisition, MicroStrategy now owns a grand total of 214,000 Bitcoins. The value of these holdings currently stands at a whopping $13.5 billion, with an average purchase price of $35,180 per Bitcoin.

In April, MicroStrategy purchased an extra 122 Bitcoins for approximately $7.8 million, bringing their total holdings to 214,400 Bitcoins. We invite you to join us at 5pm ET as we share our Q1 2024 financial findings and address any inquiries regarding our Business Intelligence sector and Bitcoin strategy. #MSTR

— Michael Saylor⚡️ (@saylor) April 29, 2024

As the President and CEO of MicroStrategy, I can share that we’ve made significant strides in our company’s growth.

During the first three months of the year, we managed to bring in over $1.5 billion through our strategic approach to capital markets, marked by the successful execution of two convertible debt offerings. Additionally, we expanded our Bitcoin holdings by acquiring 25,250 new coins since the end of Q4. We are confident that our business model, commitment to Bitcoin accumulation, and dedication to technological innovation create a distinct value proposition for our investors.

Following MicroStrategy’s announcement, the company’s stock experienced a 3.3% drop in after-hours trading. Previously, MicroStrategy’s stock had soared over 170% during the first quarter due to Bitcoin’s significant 65% increase. As a result, MicroStrategy’s stock price reached an impressive $1704 by the end of March. However, since then, its stock has dipped and is now valued at $1,292.

if MicroStrategy (MSTR) had been added to the S&P 500 index, its price could have continued climbing and potentially reached around $1,800 once more.

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2024-04-30 09:42