MicroStrategy stock MSTR rises after Michael Saylor’s resignation. For MSTR, the combination of poor earnings and overvalued fundamental metrics presents long-term bearish risks. On August 3, as investors processed the news of MicroStrategy’s (MSTR) CEO Michael Saylor’s resignation following a dismal quarterly earnings report, the stock of the company opened higher.
Microstrategy stock is up 142%
The price of MicroStrategy stock MSTR rises by nearly 14.5 percent to $324.55 per share on the daily chart, which is the highest level since May 6.
The stock experienced intraday gains as a result of a broader upswing that began on May 12 at $134. In comparison to Nasdaq’s gains of 26.79 percent during that time, MicroStrategy stock MSTR has increased by 142% since then.
Michael Saylor’s resignation
On August 3, MicroStrategy stock MSTR rises after MicroStrategy revealed a $1 billion loss in its Q2 earnings call. Surprisingly, the company’s significant exposure to the Bitcoin market played a significant role in the poor quarterly performance.
Recap: MicroStrategy is an IT company that offers cloud-based services, mobile software, and business intelligence. But investing in Bitcoin and holding it for the long term is one of its main corporate strategies.
MicroStrategy’s 129,698 BTC holdings, unfortunately, resulted in an impairment loss of $917.85 million in Q2 due to holding Bitcoin, primarily as a result of the cryptocurrency’s 50% YTD price decline. MicroStrategy stock MSTR, in contrast, fell by 42% during the same period.
Additionally, MicroStrategy’s revenue decreased by 2.6 percent from the previous year to $122.07 million. Saylor, who has steadfastly supported the Bitcoin investment strategy since August 2020, was forced to resign as the company’s CEO and take on the role of executive chairman as a result of the net quarterly losses.
The fact that MicroStrategy stock MSTR reacted positively to Saylor’s resignation as MicroStrategy’s president shows that investors are comfortable with the change in management.
What’s next for MicroStrategy stock MSTR?
Given their consistent positive correlation in recent years, Bitcoin’s performance will have a significant impact on MicroStrategy stock MSTR’s course for the remaining months of 2022. Well, a number of metrics show that a correction is about to take place.
Additionally, MicroStrategy has accumulated long-term debts totaling $2.4 billion, with interest costs totaling $46.6 million. As a result, if losses continue to increase at the current rate, the company may not be able to pay its debts.
The majority, according to Juxtaposed Ideas, a contributor to Seeking Alpha, are willing to “gamble on Bitcoin’s eventual recovery to $40,000” or higher by 2023 or 2024. However, Juxtaposed Ideas noted in its most recent analysis that “crypto and MSTR bulls may remain invested.”
“That would act as a helpful catalyst for the stock’s upcoming recovery and gives some much-needed capital back to the extremely risky investment”.