Key Takeaways
- MSTR stock hit its lowest level since April, closing at $336.57.
- Company updated stock issuance policy to fund more bitcoin purchases.
- Investors express concern over policy change after earlier guidance.
MicroStrategy Stock Drops due to Expanded Bitcoin Strategy
Shares of MicroStrategy (MSTR) fell dramatically on Tuesday from $365.31 to $336.57 or 7.92% in a day, their lowest level since April 21. According to Google Finance, in regular hours, the stock lost 7.43%, and in the after-hours session, it went down by another 0.76%, showing that investors are not reassured by the company’s revised capital markets strategy.
The fall in the stock price is closely linked to the announcement made by Executive Chairman Michael Saylor that MicroStrategy would be updating its Equity ATM Guidance so that stock issuance would be easier. The modification is aimed at giving the company more options for raising funds to acquire more bitcoins, pay off debts, and issue dividends.
Meanwhile, the downturn in bitcoin has brought the price to about $113,000, which is significantly lower than the ascent of MSTR shares to $455.90 back in July.
Investor Concerns Over Stock Issuance Policy
The new policy of MicroStrategy will allow the company to float new shares even if MSTR is trading at less than 2.5 times its net asset value (mNAV), which is a complete turnaround from the commitments made at the July 31 earnings call. At that time, management gave investors the assurance that it would not issue shares below that threshold except for the purpose of paying interest or dividends.
The quick change has angered the shareholders. One investor on X referred to the action as a “red flag,” arguing that altering guidance so soon after making a promise is likely to hurt investor trust.
The updated guidance states the company may tactically issue MSTR to pay debt interest, fund preferred dividends, or when otherwise deemed advantageous. Critics argue this gives MicroStrategy broad discretion at a time when crypto markets remain volatile.
Other crypto-related firms also saw declines Tuesday. Bullish dropped 6.09%, Robinhood fell 6.54%, Coinbase slipped 5.82%, Galaxy Digital lost over 10%, and Circle declined 4.49%. The Nasdaq Composite also closed down 1.46%.
Summary
MicroStrategy’s stock decline underscores growing investor caution as the company expands its bitcoin accumulation strategy. While management frames the updated issuance policy as flexibility, critics fear it signals dilution risks and shifting priorities in a volatile crypto market.
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