Shares of MicroStrategy (NASDAQ:MSTR) The stock rose 27.3% in September, according to data from S&P Global Market Intelligence. The business intelligence software company, known for reinvesting its cash reserves in Bitcoingenerally rising 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 new debt was expanded to $1.01 billion a few days later.
MicroStrategy’s continued Bitcoin purchases boosted the stock
Bitcoin prices rose 10.6% in September, boosted by an improving US economy. Crypto investors are also expecting the digital currency to take off quite quickly as a result of Bitcoin halving its mining rewards in April. Late 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 as of September 19, MicroStrategy’s digital currency reserve is worth approximately $15.6 billion today. That is the largest corporate Bitcoin position in the world, according to Bitcoin Treasuries. It is no surprise that this company’s shares follow the market trends of Bitcoin’s price chart.
The massive Bitcoin position includes 7,420 new coins, purchased with the portion of MicroStrategy’s new debt that was not used to pay off an older batch of senior debt notes. Investors loved this larger refinancing and the addition of more Bitcoin, judging by MicroStrategy’s soaring stock. Share prices rose 18.7% that week.
Are MicroStrategy’s software activities still important?
MicroStrategy stock was a fairly accurate proxy for Bitcoin investing from 2020 through early 2024. The software company broke away from Bitcoin price trends in February of this year, as investors embraced its all-in approach to the Bitcoin opportunity. The March price surge brought new debt-driven Bitcoin buying, underscoring MicroStrategy’s commitment to its Bitcoin strategy.
I mean, it’s all about the digital Benjamins these days. The software business is profitable and service subscription sales rose 21% year-over-year in the second quarter. But regardless, Bitcoin is the force that moves the needle for MicroStrategy investors.
For example, MicroStrategy introduced a plethora of new features to its ONE software suite on October 1, expanding the package’s generative artificial intelligence (AI) and data analytics capabilities. Market makers yawned and sent MicroStrategy’s share price 5% lower that day.
So MicroStrategy could be the stock for you if you expect Bitcoin to continue to rise and want to invest in that trend through a standard stock. Or perhaps you expect the company to fund massive long-term improvements to its software business from its rising Bitcoin reserves. Either way, MicroStrategy has become a pretty direct bet on Bitcoin. Cryptocurrency bears should look elsewhere. September’s market action has only strengthened that argument.
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Anders Bylund has positions in Bitcoin. The Motley Fool holds and recommends positions in Bitcoin. The Motley Fool has a disclosure policy.
Why MicroStrategy Stock Soared Last Month was originally published by The Motley Fool
