Why MicroStrategy Shares Soared Last Month

Actions of MicroStrategy (MSTR 6.85%) gained 27.3% in September, according to S&P Global Market Intelligence data. The business intelligence software company, known for reinvesting its cash reserves in Bitcoinoverall, it trended upward along with the leading cryptocurrency. It also accelerated in mid-September, when the company said it would borrow another $700 million to refinance old debt and buy even more Bitcoin. And that’s not all — MicroStrategy shares rose again when the new debt was extended to $1.01 billion a few days later.

MicroStrategy’s continued Bitcoin buying spree has boosted the stock

Bitcoin prices rose 10.6% in September, boosted by a growing US economy. Crypto investors are also expecting the digital currency to take off fairly soon following the halving of Bitcoin mining rewards in April. The end of 2024 or the first half of 2025 would be a reasonable starting point for the fourth halving-based price increase, based on market data from the first three halvings.

With 252,220 bitcoins under control as of September 19, MicroStrategy’s digital currency holdings are worth about $15.6 billion today. This is the largest corporate Bitcoin position in the world according to Bitcoin Treasuries. It is no surprise to see that this company’s stock is following the market trends on the Bitcoin price chart.

The massive Bitcoin position includes 7,420 new coins, bought with the portion of MicroStrategy’s fresh debt that wasn’t used to pay off an older batch of senior notes. Investors liked this increased refinancing and the addition of more Bitcoin, judging by MicroStrategy’s rising stock. Share prices rose 18.7% that week.

Does the MicroStrategy Software Business Still Matter?

MicroStrategy stock has been a fairly accurate proxy for Bitcoin investments from 2020 to early 2024. The software company separated itself from Bitcoin price trends in February of this year as investors embraced the holistic approach to the Bitcoin opportunity. March’s price rally involved another debt-backed Bitcoin purchase, underscoring MicroStrategy’s commitment to its Bitcoin strategy.

I mean, it’s all about digital Benjamins these days. The software business is profitable, and sales of service subscriptions rose 21% year over year in the second quarter. But Bitcoin is the power that moves the needle for MicroStrategy investors anyway.

For example, MicroStrategy introduced a host of new features to its ONE software suite on October 1, boosting the suite’s generative artificial intelligence (AI) powers and data analytics capability. Market makers yawned and sent MicroStrategy’s stock price 5% lower on the day.

So MicroStrategy may be the stock for you if you expect Bitcoin to continue to rise and want to invest in this trend through a standard stock. Or maybe you expect the company to fund massive long-term improvements to its software business from its growing Bitcoin reserves. However, MicroStrategy has become a fairly direct bet on Bitcoin. Cryptocurrency bears should look elsewhere. The market action in September only strengthened this argument again.