In its second quarter, MicroStrategy (MSTR) recorded an impairment charge of $24.1 million on its Bitcoin (BTC) holdings, according to the latest earnings report. However, this is a notable decrease from the $917.8 million recorded in the same quarter of the previous year, and a slight increase from $18.9 million in Q1. The impairment reflects the decline in the price of Bitcoin against the acquisition cost, with the price beginning at roughly $28,500 in Q2 and ending at about $30,400.
MicroStrategy, however, continued its bullish stance on Bitcoin, increasing its holdings to 152,800 Bitcoins by July 31, 2023. The CFO, Andrew Kang, announced the addition of 12,333 Bitcoins in the second quarter, marking the largest increase since Q2 2021. The company utilized cash from operations and raised capital efficiently to boost Bitcoin on its balance sheet, encouraged by rising institutional interest and regulatory clarity. The total Bitcoins are now worth roughly $4.5 billion, even as shares of MSTR fell by 1% to $430 after-hours on Tuesday.
Return to profitability and future outlook
In a significant turnaround, business intelligence firm MicroStrategy reported a net income of $22.2 million in Q2, contrasting sharply with a net loss of $1.1 billion in the prior-year period. The revenues remained flat at $120.4 million, and the dramatic swing was attributed to the reduced digital asset impairment loss. The price of Bitcoin hovered between $25,000 and $30,700, fueled by a rally following new Bitcoin exchange-traded funds filings to the SEC.
Andrew Kang highlighted the company’s strategy of using cash from operations to enhance its Bitcoin balance sheet, acting on the promising backdrop of accounting transparency, institutional interest, and regulatory clarity. Given recent SEC actions, MicroStrategy Chairman Michael Saylor also expressed confidence in Bitcoin’s position. With an additional acquisition of 467 BTC, the firm’s total Bitcoin balance reached $4.5 billion. MicroStrategy is also planning to sell up to $750 million in stocks for acquiring more Bitcoin and other general corporate purposes.
MicroStrategy’s share price has also seen a resurgence, rising nearly 200% to $434.98 at the time of writing, and the price of Bitcoin surged 79% since the beginning of the year. Analysts from Berenberg Capital have posted a bullish outlook for MicroStrategy, anticipating significant price gains in the wake of the upcoming Bitcoin halving rally.
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