MicroStrategy’s stock fell approximately 5.9% following the release of its third-quarter earnings, which came in slightly below analysts’ expectations. An analyst has indicated that the company may face further challenges as the U.S. elections approach.
In an announcement on October 30, MicroStrategy reported that its software division generated $116.1 million in revenue for the quarter, marking a 10.3% decrease compared to Q3 2023 and falling short of forecasts by about 5.22%.
Additionally, the company achieved a 5.1% return on its Bitcoin holdings during the quarter, with a total gross profit of $81.7 million, reflecting a robust gross margin of 70.4%. This performance coincides with the firm’s ongoing rebranding efforts as a “Bitcoin development company” this year.
MicroStrategy’s share price dipped by roughly 4.23% during trading on October 30, settling at $247.31. In after-hours trading, the stock continued to decline, dropping another 1.75% to a current price of $242.99, as reported by Google Finance.
In a recent earnings call, CEO Michael Saylor highlighted MicroStrategy’s impressive growth compared to other leading tech firms, including Nvidia (NVDA) and Tesla (TSLA). Since August 2020, MicroStrategy’s stock has skyrocketed by 1,989%, far surpassing Nvidia’s growth of 1,165%.
Other Tech Companies Yet to Embrace ‘Digital Capital’
Saylor acknowledged that while Nvidia and Tesla are formidable companies, they have yet to fully embrace the concept of digital capital. He emphasized that MicroStrategy’s strategy is more easily replicable, stating, “We’ve been publishing the playbook” and will continue to do so.
“MicroStrategy isn’t just a company that made a timely investment; we represent the start of a broader digital capital transformation,” he added. “Bitcoin is digital capital, and soon, many companies will recognize this—first dozens, then hundreds, then thousands.”
MicroStrategy May See Price Volatility Around US Election
However, economist Timothy Peterson cautioned that MicroStrategy’s stock could encounter additional volatility if Bitcoin experiences a downturn following the U.S. presidential election on November 5.
Peterson explained that MicroStrategy’s stock is highly sensitive to Bitcoin’s performance. If BTC were to decline post-election, the company’s stock could suffer an even steeper drop. “If Bitcoin crashes after the election, MicroStrategy’s (MSTR) price would likely fall two to three times more sharply, given its correlation to Bitcoin,” he noted.
He further elaborated, “The leverage from its Bitcoin holdings magnifies downside risks, making MSTR more vulnerable than Bitcoin itself in a downturn.”
Conversely, if Bitcoin were to exceed its all-time high of $73,679—currently trading at $72,432, just 1.7% below that threshold—Peterson believes MicroStrategy’s stock would “likely surge, serving as a proxy investment for Bitcoin exposure.”
In addition, MicroStrategy announced plans to raise $42 billion over the next three years to expand its Bitcoin portfolio. This initiative, termed the “21/21 plan,” aims to raise $21 billion in equity and another $21 billion through fixed-income securities.
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