MicroStrategy Stock Soars by 20% as Bitcoin Investments Drive Major Gains
Summary:
MicroStrategy's stock price surged over 20% on March 4, maintaining a 15% gain by midday. The company, a significant Bitcoin investor, saw its share price rocket from $1,079 to an intraday high of $1,339. Approximately 20% of the company's publicly available shares, valued around $3 billion, were tied up in short positions. The company recently added 3,000 Bitcoins to its holdings at an average cost of $51,813 per coin. The total value of MicroStrategy's Bitcoin assets stood at $12.8 billion with Bitcoin's price recorded at $66,332 on March 4. The company's shares were trading at $1,251 at the time of writing, marking nearly a 16% increase for the day.
MicroStrategy's (MSTR) stock price soared up by over 20% during the early hours of trading on March 4 in the United States, maintaining a gain of over 15% by the middle of the day. This company is a conspicuous investor in Bitcoin (BTC). After ending the previous trading day at $1,079, MicroStrategy started trading at $1,200 on March 4, peaking at an intraday high of $1,339.
Andrew Kang, Co-Founder of Mechanism Capital, noted that about 20% of MicroStrategy's publicly traded shares, approximately $3 billion in value, were tied up in short positions. He hypothetically suggested this could be due to traditional finance enthusiasts eager to snatch up the increased value of the stock over its net assets, betting on a subsequent share drop. Kang posited a scenario where this strategy could lead to a significant short squeeze, similar to GameStop’s (GME) dramatic price surge in January 2021. For reference, GME shares rocketed up 1,500% within a two-week span, only to spiral down to $13 after peaking over $81.
Michael Saylor, founder and chairman of MicroStrategy, reported on February 26 that the company added 3,000 BTC to its asset portfolio between February 15 and 25, averaging a price of $51,813 per coin, or a total of $155 million. This acquisition took the company's BTC holdings to a whopping 193,000 BTC, bought at an average rate of $31,554 per coin, costing around $6.1 billion. With the price of BTC on March 4 recorded at $66,332, the total value of MicroStrategy's BTC assets stood at a staggering $12.8 billion.
The market sentiment towards MicroStrategy is overwhelmingly positive. A market report from investment banker Benchmark on February 27 recommended MicroStrategy as a "buy," with a target price of $990, predicting further price gains from the upcoming BTC halving. On February 20, Saylor announced his continual support for Bitcoin, highlighting its technical superiority over gold, real estate, and the S&P 500.
At the time of reporting, MicroStrategy's share price stood at $1,251, marking nearly a 16% increase over the day.
Published At
3/4/2024 9:10:36 PM
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