Updated 04 May, 2021

MicroStrategy Exits First Quarter Holding $5bn in Bitcoin



Key Takeaways:

  • MicroStrategy reveals a boost in revenue, up 52.3% in subscriptions and product licenses
  • Michael Saylor says the company will continue to acquire bitcoin

Boost in revenue and the key focus for investors

MicroStrategy reported its first-quarter financial results last week. Report showed a sharp increase in revenue in certain sectors. The software company reported a 52.3% increase in subscription services revenue. It reached $31.3mn. Total revenue for the quarter ended March, arrived at $122.9mn. This marked a 10.3% increase compared with the same quarter a year ago.

However, key focus for investors in the earnings report was MicroStrategy’s Bitcoin profits. According to the quarterly report, the company has not sold any bitcoin from its holdings, meaning it has not made any bitcoin profits for the first quarter. The company still continues to hold 91,579 bitcoins. Report mentions that the aggregate cost of the total bitcoin stack is $2.23bn. On the other hand, “the market value of the company’s bitcoin holdings is $5.1bn” calculated based on the market price of bitcoin of $55,492. In other words, MicroStrategy’s bitcoin bet has more than doubled in size.

MicroStrategy and the larger market

The company’s market capitalization currently stands at around $6.4bn. This suggests that over 80% of the company’s valuation is represented by bitcoin. “We continue to be pleased with our bitcoin strategy. We successfully raised more than $1 billion of additional capital in the quarter to expand our Bitcoin holdings, which now exceed 91,000 Bitcoins,” said Michael Saylor, MicroStrategy’s CEO in a press release. “[….] continue to acquire and hold additional bitcoin as we seek to create additional value for shareholders,” he added.

Mr. Saylor, also mentioned his company “may purchase additional bitcoins and increase its overall holdings of bitcoin or sell its bitcoins and decrease its overall holdings of bitcoin.” Michael Saylor has been actively buying bitcoin for the past nine months. He began converting MicroStrategy’s cash reserves to Bitcoin when the digital asset’s price was hovering around $24,000.

Tesla is another notable example of a mainstream company banking on Bitcoin. Tesla revealed in its first-quarter financial results that it had sold 10% of its Bitcoin holdings. This translates into $272mn, for a profit of $101mn.