MicroStrategy stagnates – has Michael Saylor gone over the top?

MicroStrategy stagnating – has Michael Saylor missed the boat?

Microstrategy’s share price has increased almost tenfold in the last few months. Currently, MSTR is struggling to reach the US$1,000 mark again. Is CEO Saylor’s recent announcement behind this?

The shares of the US IT service provider MicroStrategy have been on a record rally. On 8 February, MSTR set an interim all-time high at 1,350 US dollars. With ever new announcements of bitcoin investments, CEO Michael Saylor has fuelled MSTR’s price rally. The enormous rise in the bitcoin price of Bitcoin Up since the end of 2020 has played into the CEO’s hands.

As recently as 16 February, Saylor once again announced its intention to replenish the company’s bulging Bitcoin coffers with further BTC equivalent to almost one billion US dollars. This will be financed with bonds. However, Saylor’s aggressive BTC accumulation is causing mixed reactions among market observers.

“Irresponsible”: Roubini condemns Michael Saylor’s Bitcoin strategy

While investors can rejoice in a gain of over 670 percent since the beginning of August 2020, some analysts criticise Saylor’s bitcoin enthusiasm. One of them is Nouriel Roubini. The US economist known as “Dr. Doom” because of his prediction of the 2007/08 financial crisis is notorious for his dismissive attitude towards Bitcoin. Accordingly, Roubini shows little understanding for MicroStrategy’s Bitcoin escapades:

“For institutional investors to say, ‘We’re going to invest in crypto’ makes no sense. You have a failing company that had a flat stock – like MicroStrategy – for a decade, and their head, who is a coke addict, decided he should put the whole house on bitcoin. That is irresponsible behaviour. There’s not going to be a corporate CEO who puts his money into something that volatile, permabear Roubini doesn’t leave a good hair on Saylor’s face in the Coindesk interview.

MicroStrategy stock in correction mode?

When it was announced on 8 February that the US carmaker Tesla had also entered the Bitcoin market with an investment worth billions, the MSTR share also benefited from the news. And probably not only because the Bitcoin price rose from 38,000 to over 46,000 US dollars on the day of the Tesla news. By Tesla’s decision to add BTC to its reserve, Musk also legitimised Saylor’s bitcoin strategy, in a sense. On 8 February, the MSTR share price broke through the sound barrier of 1,000 US dollars, and the all-time high of 1,315 was reached on 9 February. Since then, the share price has been, if not plummeting, at least falling. The thousand mark was surrendered again on 16 February, the day MicroStrategy announced further bitcoin purchases. At press time, MSTR is trading at US$925 on the New York Stock Exchange.

Saylor chains MSTR to the bitcoin bandwagon

There is no question that Saylor’s controversial bitcoin move has paid off: The company’s value has increased sevenfold since August 2020 and currently stands at US$8.8 billion. This is largely due to the massive rise in Bitcoin’s price. MSTR and BTC have been moving in tandem since the second half of the year. MicroStategy has even outperformed Bitcoin.