Key Takeaways:
- MicroStrategy’s Net Loss: MicroStrategy reported a substantial net loss of $53.1 million in Q1 2024, worsened by a $191.6 million impairment on its digital assets, a significant increase from the previous year.
- Revenue Decline and Bitcoin Holdings: The company’s revenue fell by 5.5% year-over-year to $115.2 million, while it continued to acquire Bitcoin, adding 122 Bitcoins at an average price of $35,180 each.
- Accounting Standards Impact: MicroStrategy has yet to adopt the new FASB fair value accounting standard which would significantly increase the valuation of their Bitcoin holdings from $5.07 billion to an estimated $15.2 billion under current market prices.
MicroStrategy, a significant corporate investor in Bitcoin, faced a $53.1 million net loss in the first quarter of 2024, even as it added more Bitcoin to its holdings in April.
The loss was primarily due to a $191.6 million impairment on digital assets, marking a tenfold increase from Q1 2023.
BREAKING: MicroStrategy bought 122 more #Bitcoin for $7.8 million. pic.twitter.com/IZWUNj0kHY
— Bitcoin Magazine (@BitcoinMagazine) April 29, 2024
The company’s revenue also decreased by 5.5% from the previous year, totaling $115.2 million as reported in their first-quarter results.
Despite the recent surge in Bitcoin’s market value, which saw a 65% increase during the quarter, MicroStrategy has not adopted the new digital asset fair value accounting standard.
Had they done so, the Bitcoin they hold would have been valued at $15.2 billion rather than the $5.07 billion recorded under traditional accounting methods.
In May 2023, MicroStrategy advocated for this new accounting standard in a letter to the Financial Accounting Standards Board (FASB).
By November, FASB updated its guidelines to require fair value reporting of digital assets starting after December 15, 2024.
In terms of Bitcoin acquisitions, MicroStrategy continued its buying streak by purchasing an additional 122 Bitcoins for $7.8 million in April, bringing its total holdings to 214,400 Bitcoins.
JUST IN: Michael Saylor’s MicroStrategy bought 122 #Bitcoin worth $7.8 million and now holds 214,400 #BTC pic.twitter.com/lRC6ZuKuIV
— Simply Bitcoin (@SimplyBitcoinTV) April 29, 2024
These were acquired at an average price of $35,180 each, amounting to a total value of $13.5 billion.
To support its Bitcoin purchases, MicroStrategy raised $1.5 billion through two convertible note offerings in the first quarter, enabling the purchase of 25,250 additional Bitcoins.
This quarter marks the company’s 14th consecutive quarter of Bitcoin accumulation, as highlighted by Phong Le, MicroStrategy’s President and CEO.
Despite these strategic moves, MicroStrategy’s stock experienced a 3.3% decline in after-hours trading following the announcement.
BREAKING ‼️ – MicroStrategy acquired an additional 122 Bitcoin for $7.8 million and now holds 214,400 Bitcoin. #Bitcoin 🔥🔥🔥 pic.twitter.com/d9AFWJ4vV2
— Swan (@Swan) April 29, 2024
The stock’s peak during the first quarter reached $1704, driven by Bitcoin’s significant price increase, but it later receded to $1,292, according to Google Finance.
About The Author
Victor Fawole, a seasoned Web3 content creator and social media influencer, excels in bringing the pulse of the crypto world to our readers.
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