Despite its name, business intelligence and cloud corporation MicroStrategy ($MSTR) has weathered major market changes since its founding in 1989, surviving the Dot Com Bubble, the Great Recession, and the COVID-19 market meltdown. But its biggest gamble has been its bet on Bitcoin, which has remade the company — for better or worse.

MicroMacroStrategy: In 2020, CEO Michael Saylor made the bold move to invest $250M of the organization’s cash into Bitcoin at an average price of $11.6K, making MicroStrategy the first publicly traded firm to purchase and hold the digital currency on its balance sheet. Today, four years later, the company holds $32B worth of Bitcoin — 331.2K coins, or 1.58% of all available Bitcoin, at an average price of $49.9K. As Bitcoin prices soared, the strategic software firm crypto strategy has overshadowed what’s left of its core business.

• Thanks to this Bitcoin rally, MicroStrategy has become one of America’s top 100 companies by market value, with its market cap recently eclipsing $100B.
• That comes even as its revenues and net income have fallen in the latest quarter, with revenue dropping 10% to $116M and its net loss reaching -$340M, a 137% year-over-year decline.

Big Buys for a Micro Company

MicroStrategy has now posted four consecutive quarters of massive revenue and EPS misses, but that’s been no matter for investors, even after CEO Michael Saylor stepped aside in 2022 amid Bitcoin-related losses. Under new leadership, the business has been making even more purchases.

• Since Oct. 31, MicroStrategy has bought over $6.6B worth of Bitcoin by issuing zero-interest debt — with its most recent purchase on Monday, even as the decentralized coin rose past $86K.
• The company also plans to sell up to $42B worth of stock and bonds through 2027 to fund future crypto token purchases, which could make it the largest Bitcoin holder in the world.

Going the other way: As of Nov. 21, Bitcoin is sitting at $99K — on the doorstep of $100K. At these recent prices, MicroStrategy’s $100B valuation is nearly three times its current Bitcoin treasury — representing a significant premium and meaningful risk for an enterprise that has grown 650% year-to-date. Short sellers at Citron Research, who have recently been charged with fraud, warn that the wild ride is coming to an end — citing the rise of Bitcoin ETFs and easier access to crypto investments. They’ve taken short positions on MicroStrategy, betting that its value will fall. Following their report, Saylor’s tech venture’s stock dropped 16%.