Extreme HODL – THE balance sheets of the 4ᵉ quarter of 2022 (and therefore of the entire year) are starting to arrive for companies, especially Americans. Whether Tesla and Elon Musk are doing pretty wellwe are going to see MicroStrategy instead had his head underwater on his side. But nothing to question his bitcoin bet (BTC)?
$250 million loss in Q4 for MicroStrategy
Since August 2020, the listed company MicroStrategy (MSTR action) has not skimp on these bitcoin purchases. To the point of having accumulated a gigantic treasure of 132,500 BTC to date, equivalent to $3.1 billion at the time of this writing.
With such exposure to the king of cryptos, one could suspect that the end of the year 2022 of MicroStrategy was going to take the same bad turn than the cryptocurrency market. According to its 4th quarter balance sheet, published on February 2, 2023, the company founded by Michael Saylor recorded a net loss of $249.7 million over the last 3 months of 2022.
And as one might fear, it is the unrealized capital loss over the company’s bitcoin holdings that weighs on MicroStrategy’s balance sheet. His BTC have (virtually) lost $197.6 million to the society. Over the whole of 2022, it is even worse: the theoretical latent loss was $1.3 billion between the sale price of its BTC at the start of 2022, and their sale price at the end of the past year.
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A more lenient first quarter of 2023, if Bitcoin maintains its rise?
This depreciation of Bitcoin prices in Q4 2022, well helped by the catastrophic fall of FTXcreated losses theoretical, because MicroStrategy of course did not sell all of its precious BTC. This unrealized capital loss is a loss potential the value of an asset, calculated as if it were to be sold on the day the accounts are closed. In this case, December 31, 2022.
But the cryptosphere will have noted that, since the start of 2023, Bitcoin and the crypto-asset market have had a little taken from the hair of the beast. To the point of seeing reach again the 24,000 dollars for a BTC. Thus, the course of the king of cryptocurrencies took the pretty trifle of +42% since 1er last January.
You will have understood it: if ever the course of Bitcoin don’t fall back violently by the end of March (at least not below the $16,800 at the start of the year), MicroStrategy could well register this time a juicy unrealized capital gain on his crypto bet. But whatever the case, the company still seems to be clinging to its HODL strategy (custody) on Bitcoin:
“I am pleased to report that we again increased our bitcoin holdings during the last quarter, reaching a total of 132,500 bitcoins. Our business strategy and belief in acquiring, holding and growing our position in bitcoin over the long term remains unchanged. »
Andrew Kang, Chief Financial Officer (CFO) of MicroStrategy
Capital losses or capital gains on its bitcoins, as long as they remain latent (not cashed), this ultimately does not matter much to MicroStrategy. In any case, his bet on the king of crypto-assets attracted. Indeed, this way indirect (via Nasdaq-listed MSRT shares) of expose oneself to Bitcoin inspires companies, such as the trading giant Group One. The latter would like acquire large amounts of shares of Michael Saylor’s company.
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