MicroStrategy Plans to Buy More Bitcoin Despite $197.6M Impairment in Q4

Bitcoin rose more than 40% since the impairment was logged, while MicroStrategy's (NASDAQ:MSTR) shares went 101% into the green.

In its Q4 earnings report, MicroStrategy revealed a $197.6 million impairment charge on its Bitcoin holdings. Furthermore, it logged a net loss of $249.7 million causing its shares to sink more than 2% in the after-hours trading.

MicroStrategy Logs $197.6M Impairment Charge, $249.7M Net Loss

MicroStrategy’s report on the fourth quarter of 2022 revealed a net loss of $249.7 million. The firm beat revenue expectations as they decreased to $132.6 million—a 1.5% change—instead of being down to $131 million as was forecast. The company also reported an impairment charge worth $197.6 million

The impairment demonstrates the decline in the price of Bitcoin which started Q4 worth just over $19,000 and finished at around $16,500. A company is required to record the value of its assets—including digital assets like BTC—at the time of acquisition and adjust them if their price goes down—get impaired.

It is important to note that January was one of Bitcoin’s best months in the last decade. Its price rose by more than 40% since the conclusion of Q4 of 2022 and stood well above $23,000 at the time of writing. Furthermore, while MicroStrategy’s stocks declined by more than 70% throughout 2022, its shares did well since the start of 2023 rising by 101% YTD—a move from $142 up to $292.

MicroStrategy’s Bitcoin Maximalism

Considering that MicroStrategy’s Michael Saylor is a well-known Bitcoin maximalist, it comes as no surprise that the firm also revealed its intent to keep increasing the amount of digital currency it has. Currently, the company holds more than 132,000 BTC and has increased its holdings by 2395 between November and December of last year.

MicroStrategy’s commitment to Bitcoin remained unshaken throughout the “crypto winter” of 2022 and announced it would double down on the approach even as it revealed a $146 million loss in Q4 2021. As a result, it perhaps isn’t surprising that the value of the company’s stock has become linked to the price of Bitcoin.

For example, MicroStrategy’s shares dropped almost 20% when Bitcoin’s price fell below $16,000 at the time of FTX’s collapse. On the other hand, they rose 11% after the firm revealed it would sell shares and buy more BTC in September 2022.

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