MicroStrategy’s Software Business Turns Profitable As Bitcoin Stash Appreciates

MicroStrategy
MSTR
, bitcoin investment vehicle I belong to a business software company.

Steady progress in the business analytics sector is looking to move customers from on-premises licensing programs to recurring internet-based subscriptions (known as the software-as-a-service model), gaining momentum for results. I should get it. To Joe Vafi, Managing Director of Canaccord Genuity. The business is relatively mature, but “high margins and very tenacious,” he adds.

Consensus data compiled by FactSet shows that revenue is expected to fall about 3% to $130 million in the fourth quarter, but the company lost $90 million a year ago to $10.7 million. We plan to report net income in dollars. Its last profit was in the final quarter of 2020, when it made $2.7 million.

On an adjusted basis used by Wall Street analysts, MicroStrategy is expected to earn 98.3 cents per share, according to Bloomberg data.

As far as investors are concerned, the software business is secondary to the company’s Bitcoin strategy. Basically it is to buy and hold top cryptocurrencies.micro strategy sold some For the first time in December, Q4 purchases outpaced tax cut strategies. On December 22, he liquidated 704 Bitcoins at an average price of $16,776, but two days later he bought back 810 Bitcoins at $16,845 each. SEC filingIt also revealed that it purchased 2,395 coins for $17,871 each in November and December.

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Los Angeles CPA Brian T. Stoner calculates that the tax sale, while not subject to the wash rule that denies deductions for immediate repurchases of securities, created a short-term capital loss of $770,880. may have been last year. It could be used to offset capital gains in 2022 or 2023, he said.

After the announced Q4 transactions, MicroStrategy was left with 132,500 bitcoins, acquired on December 28th at an average price of $30,397, now worth nearly $3.2 billion. $24,000 All of its fourth-quarter acquisitions were profitable today, and the company may be looking to book some of its December losses on acquisitions that paid an average of $49,229 in 2021, said a Los Angeles tax accountant. Stephen Chan said last year. .

Given the stable nature of the business, MicroStrategy stock tends to trade in line with Bitcoin.of stock After trading above $500 per share in late March, the cryptocurrency sell-off plunged the stock to close out the year at $141.57. It then recovered to $291 as Bitcoin rose from below $16,000 to its current price.

According to Canaccord Genuity, MicroStrategy not only trades in Bitcoin, but its holdings demand a premium. According to the company, reflecting the value of stocks as a substitute for Bitcoin without the hassle of establishing a cryptocurrency wallet and the security risks traditionally present with cryptocurrencies is attractive to retail investors. But we also believe institutional investors are using equities for strategy, something more sophisticated than just a buy-and-hold.

Canaccord noted that a buyer called Group One Trading has informed the SEC that it has acquired a 13.5% stake in MicroStrategy’s common stock. While this could have been achieved through derivatives rather than necessarily direct stock holdings, the relatively large open interest in options on stocks suggests that institutional investors are using the company as a proxy for Bitcoin in their trading tactics. I think it shows that it is in use.