Why did MicroStrategy’s stock soar in September? The gains start and end with Bitcoin, but there’s more to the story.
Shares of MicroStrategy (MSTR 6.38%) gained 27.3% in September, according to data from S&P Global Market Intelligence. The business intelligence software company, known for reinvesting its cash reserves in Bitcoin, generally trended upward along with the leading cryptocurrency. It also accelerated in mid-September, when the company said it would borrow another $700 million to refinance old debt and buy even more Bitcoin. And that’s not all — MicroStrategy’s stock surged again when the new debt was expanded to $1.01 billion a few days later.
MicroStrategy’s continued Bitcoin-buying spree boosted the stock
Bitcoin prices rose 10.6% in September, boosted by a strengthening American economy. Crypto investors also expect the digital currency to take off fairly soon as a result of Bitcoin halving its mining rewards in April. Late 2024 or the first half of 2025 would be a reasonable starting point for the fourth halving-based price surge, based on market data from the first three halvings.
With 252,220 Bitcoins under its belt as of Sept. 19, MicroStrategy’s digital currency reserve is worth roughly $15.6 billion today. That’s the largest corporate Bitcoin position in the world according to Bitcoin Treasuries. It’s no surprise to see this company’s stock following the market trends of Bitcoin’s price chart.
The massive Bitcoin position includes 7,420 new coins, bought with the portion of MicroStrategy’s fresh debt that wasn’t used to pay down an older batch of senior debt notes. Investors loved this upsized refinancing and the addition of more Bitcoin, judging by MicroStrategy’s soaring stock. Share prices increased by 18.7% that week.
Does MicroStrategy’s software business even matter anymore?
MicroStrategy’s stock was a fairly accurate proxy for Bitcoin investments from 2020 to early 2024. The software company separated from Bitcoin’s price trends in February this year, as investors embraced its all-in approach to the Bitcoin opportunity. The price surge in March involved another debt-based Bitcoin purchase, underscoring MicroStrategy’s commitment to its Bitcoin strategy.
I mean, it’s all about the digital Benjamins these days. The software business is profitable and service subscription sales increased 21% year over year in the second quarter. But Bitcoin is the power that moves the needle for MicroStrategy investors anyhow.
For example, MicroStrategy introduced a plethora of new features to its ONE software suite on Oct. 1, boosting the package’s generative artificial intelligence (AI) powers and data analytics capability. Market makers yawned and dropped MicroStrategy’s stock price 5% lower that day.
So MicroStrategy may be the stock for you if you expect Bitcoin to keep rising and want to invest in that trend via a standard stock. Or maybe you expect the company to finance massive long-term improvements to its software business from its rising Bitcoin reserves. Either way, MicroStrategy has become a pretty direct bet on Bitcoin. Cryptocurrency bears should look elsewhere. September’s market action only strengthened that argument again.