{"id":268651,"date":"2021-06-07T19:22:28","date_gmt":"2021-06-07T16:22:28","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/microstrategy-stock-slides-after-announcing-new-400m-debt-raise-to-buy-bitcoin\/"},"modified":"2021-06-07T19:22:28","modified_gmt":"2021-06-07T16:22:28","slug":"microstrategy-stock-slides-after-announcing-new-400m-debt-raise-to-buy-bitcoin","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/microstrategy-stock-slides-after-announcing-new-400m-debt-raise-to-buy-bitcoin\/","title":{"rendered":"# MicroStrategy stock slides after announcing new $400M debt raise to buy Bitcoin"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a413d8f1c5e3\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a413d8f1c5e3\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/microstrategy-stock-slides-after-announcing-new-400m-debt-raise-to-buy-bitcoin\/#Not_making_money\" >Not making money<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># MicroStrategy stock slides after announcing new $400M debt raise to buy Bitcoin  <\/strong>&#8221;<\/p>\n<div class=\"post-content\" data-v-5a136f3a>A lackluster balance sheet, excessive debt load, and over-leveraged exposure to Bitcoin (BTC) have crashed MicroStrategy (<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.tradingview.com\/symbols\/NASDAQ-MSTR\/\">MSTR<\/a>) stock by more than 63% since February 2021 already. Nevertheless, the business intelligence company has ignored the risks of its frothy valuations; it now wants to raise more debts and buy Bitcoin with proceeds.<\/p>\n<p>MicroStrategy <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.businesswire.com\/news\/home\/20210607005220\/en\/MicroStrategy-Announces-Proposed-Private-Offering-of-400-Million-of-Senior-Secured-Notes\">announced<\/a> Monday morning that it &#8220;intends to raise $400 million\u00a0aggregate principal amount of senior secured notes in private offering [&#8230;] to acquire additional Bitcoins.&#8221; The company already holds more than 92,000 BTC worth about $3.31 billion at current exchange rates, almost 1.5 times its principal investment.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-06\/05faf6d0-df6f-4403-967f-cf00c257a382.png\"><figcaption style=\"text-align: center;\"><em>BTC\/USD (blue) vs. MSTR (orange) YTD performance. Source: TradingView<\/em><\/figcaption><\/figure>\n<p>MSTR plunged 2.17% after the New York opening bell Monday to $469.29 per share. At its year-to-date high, it was changing hands for $1,135.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Not_making_money\"><\/span>Not making money<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In its previous statements, MicroStrategy has already clarified that it is building up a Bitcoin portfolio as an insurance policy against\u00a0the continuing devaluation of the world&#8217;s major currencies. But with its back-to-back Bitcoin purchases, the company has effectively protected itself from more than just the US dollar decline. Hint: unprofitable business lines.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-06\/302225dc-23db-4c3c-a30a-9f624bd10f61.png\" alt=\"\" title=\"\"><figcaption style=\"text-align: center;\"><em>MicroStrategy&#8217;s net income growth plunged 121.90% in 2020. Source: WSJ<\/em><\/figcaption><\/figure>\n<p>A look into <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.microstrategy.com\/content\/dam\/website-assets\/collateral\/financial-documents\/financial-document-archive\/2020-annual-report.pdf\">MicroStrategy&#8217;s alternative asset holdings<\/a> also shows the company overly skewed towards Bitcoin, with real estate accounting for less than 0.2% of the total investments. <\/p>\n<p>Its latest quarterly report also showed a weaker balance sheet, with a debt-to-equity ratio at 4.55 \u2014 a significant debt load of $1.66 billion against an equity valuation of $0.37 billion \u2014 as of March 31, 2020.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2021-06\/219f43a1-2549-4ac4-85b3-181bad39c4c4.png\" alt=\"\" title=\"\"><figcaption style=\"text-align: center;\"><em>MicroStrategy was holding assets worth $2.44 billion as of March 2021, out of which $1.947 billion was Bitcoin. Source: WSJ<\/em><\/figcaption><\/figure>\n<p>That is particularly risky when Bitcoin&#8217;s price volatility is taken into account. MicroStrategy does not generate sufficient income to service its debt load and hugely relies on Bitcoin profits to do so. Atop that, it now wants to raise another $300 million, although its convertible notes are not due maturity until 2028.<\/p>\n<p>Juan De La Hoz, a CETF\/ETF fund strategist, feared that MicroStrategy risks becoming insolvent should Bitcoin fall by more than 50% in the future, reminding the flagship cryptocurrency&#8217;s massive declines in the year 2014 and 2018. The analyst added MicroStrategy would most probably liquidate its Bitcoin holdings to avoid insolvency.<\/p>\n<p>Hoz <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/seekingalpha.com\/article\/4430815-microstrategy-balance-sheet-analysis\">noted<\/a> that he would not invest in cryptocurrencies through leverage nor he would invest in a company that did so, hinting his extremely bearish outlook for MicroStrategy and Bitcoin in one line.<\/p>\n<blockquote><p>It is simply too risky, you could lose it all, and I&#8217;d rather not take that chance.<\/p><\/blockquote>\n<p>Bitcoin prices sleepwalked through MicroStrategy&#8217;s announcement early morning. The BTC\/USD exchange rate continued trading sideways while maintaining support above $36,000.<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/microstrategy-stock-slides-after-announcing-new-400m-debt-raise-to-buy-bitcoin\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# MicroStrategy stock slides after announcing new $400M debt raise to buy Bitcoin &#8221; A lackluster balance sheet, excessive debt load, and over-leveraged exposure to Bitcoin (BTC) have crashed MicroStrategy (MSTR) stock by more than 63% since February 2021 already. Nevertheless, the business intelligence company has ignored the risks of its frothy valuations; it now&#8230;<\/p>\n","protected":false},"author":1,"featured_media":268652,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDYvNzMwYjM1YWMtYmVhYy00MDM0LThmZmUtM2I4MzNkYmIwZDNlLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[79806,74862,81951,74937,74939,108601,73785,72332,70359],"class_list":["post-268651","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-analysis","tag-bitcoin","tag-bitcoin-analysis","tag-bitcoin-price","tag-market-analysis","tag-stock-investment","tag-markets","tag-nasdaq","tag-stocks"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/268651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=268651"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/268651\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/268652"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=268651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=268651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=268651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}