It may have taken awhile amid the downturn in current crypto markets, but MicroStrategy (NASDAQ: MSTR) has finally made another bitcoin purchase. The latest addition saw a total of $42.8 million worth of bitcoin added to the firms holdings.
The purchase, which as per SEC filings occurred between November 1 and December 21, 2022, saw 2,395 bitcoin purchased at an average price of $17,871 each, which is said to be inclusive of fees and expenses. The coins were purchased via the firms MacroStrategy LLC subsidiary.
Oddly however, the company then sold 704 bitcoin on December 22, at a price of $16,776 per bitcoin. The move equated to a loss of $1,095 per coin, while providing the firm with gross proceeds of $11.8 million. The sale may generate a tax benefit as per the company, given the loss of $771,975 resulting from the sale (based on the most recent purchase price, although this figure could potentially be higher depending upon the accounting method used).
Two days later, the company then shelled out $13.6 million to acquire 810 bitcoin, at an average price of $16,845 on December 24.
All told, the company increased its position by 2,500 bitcoin across the three transactions, bringing the firms total holdings to 132,500 as of December 27. The average purchase price of those coins amounts to $30,397 per each, with the company shelling out $4.03 billion for the collection.
In a tweet related to the transactions, Saylor of course forgot to mention that some sales occurred along the way.
Justification for the sale by the firm was not provided. Previously, the firms then-CFO, Phong Le, suggested on an earnings call that US$21,000 was the bitcoin price at which the firm would see a margin call.
“As far as where Bitcoin needs to fall, we took out the loan at a 25% LTV, the margin call occurs 50% LTV. So essentially, Bitcoin needs to cut in half or around $21,000 before we’d have a margin call,” said Le, “Before it gets to 50%, we could contribute more Bitcoin to the collateral package, so it never gets there, so we don’t ever get into a situation of March call also.”
After fears of a margin call were revived in June, leading to a tumble in the value of MicroStrategy, when prompted, then CEO Michael Saylor commented, “We started with US$5 billion of unpledged collateral, we borrowed US$200 million against it. So that’s a loan-to-value of 4%… You know, people got their hands around the fact that we would adjust some collateral of bitcoin if ever it’d got to US$21,000 but it’s really a non-issue.”
Saylor has since moved into an Executive Chairman-only role at the company, with Le being appointed the role of CEO.
Separately, under the firms at-the-market financing, the company between October 1 and December 27 issued 218,575 shares for net proceeds of $46.4 million, with those shares sold at an average price of $213.16.
MicroStrategy last traded at $147.74 on the Nasdaq.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.