In the third quarter, Bitcoin witnessed a decline of over 6%, marking a subdued performance compared to the previous quarter, where it had experienced a significant 30% spike. Despite this downturn, the corporate treasury firm Strategy, also known as MSTR, remains optimistic about Bitcoin’s future. On Monday, the company announced a $43 million Bitcoin purchase, its largest acquisition in nearly a month, reflecting its continued commitment to accumulating the cryptocurrency.
Co-founder Michael Saylor has maintained a positive outlook on Bitcoin, even amidst this recent price drop. Strategy reported a substantial net income of $2.8 billion for the third quarter, corresponding to $8.42 per diluted share. Following this announcement, MSTR shares traded at approximately $262 after hours, seeing an over 3% increase from their previous close of $257, despite a significant drop of over 7% during regular trading hours. The current share price remains well below the Wall Street Journal consensus target of $551.53, though MSTR has seen a remarkable increase of more than 1,400% since pivoting its focus to Bitcoin accumulation in 2020.
In terms of revenue, the company reported $128 million from its software business. While Strategy has been aggressively accumulating Bitcoin, it has moderated the pace of these purchases as the quarter progressed, responding to fluctuating Bitcoin prices. By the end of the quarter, the firm had amassed more than 640,000 Bitcoin, valued at approximately $68 billion at current prices, solidifying its position as the world’s largest corporate holder of the cryptocurrency. This strategy has been emulated by over 200 other publicly traded companies.
Looking ahead, Strategy reaffirmed its full-year guidance of a net income of $24 billion and diluted earnings per share of $80, contingent on Bitcoin reaching $150,000 by year-end. The previous quarter had set a record for the company with $10 billion in net income. However, Bitcoin’s recent performance has been troubling, with the cryptocurrency dropping below $107,000 from its Q3 close of over $114,000, impacted by liquidity constraints and wider macroeconomic uncertainties.
Despite the volatility, Saylor has expressed confidence that Bitcoin’s price will “grind up” to $150,000 by the end of the year. In terms of funding, Strategy has shifted its capital-raising strategy in recent weeks. Although it has typically issued common shares at a premium to its Bitcoin holdings, the firm has recently refrained from issuing common shares since late September. Instead, it has focused on alternative forms of capital, including preferred shares, many of which come with quarterly dividend payments. This strategic pivot has resulted in smaller Bitcoin purchases over the last few weeks, with recent acquisitions of 196 BTC, 219 BTC, and the latest 390 BTC.
Market sentiment surrounding Bitcoin appears stable, as evidenced by a prediction market where over 90% of respondents indicated they did not plan to sell any Bitcoin. Last quarter, Strategy reported a revenue increase of 3% year-over-year, amounting to $114.5 million, highlighting its resilience in the face of market fluctuations.
