MicroStrategy Takes $8 Billion Loss Due to Decline in Bitcoin Holdings
MicroStrategy (MSTR), formerly known as MicroStrategy Incorporated, reported a second-quarter operating loss of $8.3 billion and net loss of $8.6 billion due to a non-cash fair-value markdown on its Bitcoin holdings. The company's Chief Financial Officer Andrew Kang stated that they held 846,000 Bitcoins at the end of the quarter after acquiring 83,901 more during the period. As a result of the decline in Bitcoin price from an average purchase price of $75,500 to a quarter-end price of about $58,700, MicroStrategy reported an unrealized fair-value loss of approximately $8.3 billion.
MicroStrategy's CEO Phong Le explained that the company has moved away from issuing capital solely for buying Bitcoin and is now focused on 'active capital management.' This involves selling equity, preferred securities, cash, or Bitcoin to manage the balance sheet and capital structure. As part of this strategy, MicroStrategy sold 32 Bitcoins in May and later sold 3,588 more in July to support its cash reserve and preferred dividend payments.
MicroStrategy's Chairman Michael Saylor emphasized that they intend to return their 'Stretch' (STRC) security to a trading range of $99 to $100. The company has allocated $1 billion for repurchasing STRC and had approximately $975 million remaining under this program as of the end of the second quarter.