Is MSTR a buy or sell after MicroStrategy’s $500M Bitcoin investment plans

YEREVAN (CoinChapter.com) — MicroStrategy (NASDAQ: MSTR), the publicly listed company with the largest Bitcoin (BTC holdings, plans to buy more BTC. The firm, co-founded by former CEO Michael Saylor, wants to sell $500 million worth of its stock to fund the purchase. The decision, if it materializes, could have a huge impact on the stock price of MSTR. 

According to the company filing with the U.S. Securities and Exchange Commission, MicroStrategy has entered into a sales agreement with two investment firms, Cowen and Company, LLC and BTIG, LLC. These two firms will collectively act as agents to help it sell its company shares.

As the filing makes clear, the company will use a part of the money raised from the sale of its shares to acquire more BTC.  

“We intend to use the net proceeds from the sale of any class A common stock offered under this prospectus for general corporate purposes, including the acquisition of bitcoin, unless otherwise indicated in the applicable prospectus supplement,” 

the company said in the SEC filing. 

The development comes less than two months since Michael Saylor resigned from his post as the company CEO to focus on MicroStrategy’s Bitcoin acquisition plans. 

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Should MicroStrategy (MSTR) buy more Bitcoin? 

MicroStrategy started acquiring BTC in 2020. Over the years, the business intelligence and data visualization firm has accumulated 129,698 BTC, currently valued at around $2.9 billion. The company has spent around $4 billion on Bitcoin at an average price of $33, 000 per token. 

Earlier this month, the Office of Attorney General for the District of Columbia (OAG) filed a case against Michael Saylor for tax fraud. As CoinChapter reported, Saylor allegedly evaded over $25 million in taxes. 

Meanwhile, the price of Bitcoin (BTC) is down around 70% since it reached an all-time high (ATH) of $68,900 last November. Earlier this year, in the second quarter (Q2) of 2022, the company reported a loss of over $1 billion due to the sharp fall in BTC price. 

Following the fall, there was talk in the market that Microstrategy could face a margin call due to its losses. 

However, despite the losses that forced him to step down, Saylor remains bullish on Bitcoin. The company is famous for buying more every time the price falls. However, with reports that the ‘crypto winter’ could last until mid-2023, MicroStrategy is taking a big risk. 

MSTR stock offers big rewards but comes with significant risks 

MicroStrategy’s tryst with Bitcoin has been one of the biggest moving factors in its stock price. MSTR, which trades on NASDAQ, is down over 70% since November 2021 highs. Year to date, the company stock has fallen over 50%.

At the time of writing, MSTR stock exchanges hands for around $258. This comes as a relatively large jump from $149 on June 13. However, it still displays a dip from August 11, when it traded for as high as $355. 

Last week, Bitcoin (BTC) slipped below the $20,000 mark, falling as low as $18,644 on September 7. With no end to the bear market in sight, the token could fall further. 

However, with each dip presenting a buying opportunity for MicroStrategy, investing in MSTR could reap profits, especially for long-term investors.