Strategy [MSTR] shares jumped more than 12% on Wednesday as Bitcoin’s sudden recovery spilled into crypto-linked stocks.
The price of the stock was around $103.76 after it briefly got to the $106.90 level, as Bitcoin gained a more modest 5.59%.
For Strategy shareholders, though, the strong session comes after months of pain due to the price fall. The stock traded near $190 in May and recently fell towards $90, and Michael Saylor is still telling investors not to expect an easy ride from here.
Bitcoin puts MSTR back above $100
MSTR started Wednesday at $94.54. By the end of trading, it had gained 12.15%, with 33.85 million shares changing hands.
The Bitcoin price rise provided the backdrop for the stock price move, with $BTC moving from below $65,000 to nearly $70,000 before dropping to around $68,297.
That price move tends to matter more for Strategy than for other companies because of its relationship with $BTC.
Strategy owns 840,447 $BTC, so MSTR has become a way for stock-market investors to gain exposure to Bitcoin without buying it directly. The relationship can exaggerate moves in both directions.
Wednesday showed the upside of that relationship, while the past few months showed the other side.
But even after the rally that it saw today, MSTR still remains well below its May levels.
Saylor tells investors to prepare for difficult years
Meanwhile, Saylor has offered shareholders a much longer timeline.
In response to concerns about Strategy’s falling share price and continued issuance of MSTR stock, he warned that investors should be prepared for potentially “difficult years.” He suggested common shareholders may need to think over a period as long as ten years.
In the last few weeks, there have been changes to Strategy’s Bitcoin holdings, with the company selling 1,690 $BTC for $108.6 million between August 3 and 9, using the money to repurchase STRC preferred shares.
It separately raised $653.1 million from MSTR share sales and increased its dollar reserve to $4.65 billion.
With Wednesday’s Bitcoin price, the remaining $BTC that Strategy holds were worth roughly $57.4 billion, and so far the company has spent $63.36 billion to purchase $BTC.
MSTR may have returned above $100, but both the decline $BTC witnessed earlier and Strategy’s increasingly complex financing structure continue to weigh on the investment case.
Final Summary
- MSTR gained 12.15% as Bitcoin’s rise towards $70,000 helped crypto-linked stocks to move higher.
- Saylor is asking shareholders to take a long view as Strategy sells shares and occasionally Bitcoin to raise capital.
