Shares of technology company MicroStrategy (NASDAQ: MSTR) surged to a new 52-week high on Monday, after the company disclosed that it had bought more Bitcoin (CRYPTO: BTC). On top of MicroStrategy's new purchase, Bitcoin itself is having a good day, up about 5% over the past 24 hour hours. For its part, MicroStrategy stock was up 16% as of 3:20 p.m. ET.
An unbelievable amount of Bitcoin
From Feb. 15 through Feb. 25, MicroStrategy was buying Bitcoin. The company wound up buying 3,000 additional bitcoins for $155 million. It now owns an astounding 193,000 bitcoins valued at about $10.5 billion as of this writing.
MicroStrategy has spent about $6.1 billion so far to acquire this much Bitcoin. Considering it's worth about $10.5 billion, it would seem this bet is paying off quite nicely.
Where's the money coming from?
In 2023, MicroStrategy's business generated nearly $500 million in revenue, but it produced an operating loss of $115 million. Therefore, it's not getting cash from the business.
Rather, MicroStrategy periodically sells more shares to investors so that it can have more money for Bitcoin. Since the start of 2024, it's raised about $138 million this way, which is mostly where it got its cash for its latest purchase of 3,000 bitcoins.
With 193,000 bitcoins, MicroStrategy is one of the biggest Bitcoin whales apart from its mysterious founder, Satoshi Nakamoto. But if I know this company, it won't stop here. It will probably keep selling shares on the stock market to raise money to buy more Bitcoin.
As long as the price of Bitcoin continues rising, it could be a worthwhile bet for MicroStrategy's shareholders. But if the price of Bitcoin reverses, investors in MicroStrategy stock would be in for a wild ride.
Should you invest $1,000 in MicroStrategy right now?
Before you buy stock in MicroStrategy, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and MicroStrategy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 26, 2024
Jon Quast has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
