MicroStrategy Shares Surge As CEO Saylor Steps Down To Focus On Bitcoin

August 3, 2022 9:43 pm

So far, it seems like the market is reacting positively as MicroStrategy’s CEO Michael Saylor announced that he would be stepping down from his position as CEO in order to focus purely on the company’s Bitcoin strategy.

On Wednesday, shares of the company surged by roughly 15% and some are not sure whether or not its because Saylor is stepping down or because he is doubling down on the Bitcoin acquisitions.

The company is saying that this is a “business as usual” transition and that nothing will fundamentally change with how the company operates.

So far, MicroStrategy has accumulated $917 million in losses from its crypto holdings and Saylor remains confident in the future of the digital asset during a time when many have lost faith during the crypto winter.

CoinDesk reports:

Of last quarter’s $917.8 million impairment charge on bitcoin holdings during the second quarter, it’s “essentially meaningless,” said BTIG analyst Mark Palmer, noting it has no impact on the company’s inherent value.

“That value can be easily ascertained as it stems from just two sources,” said Palmer, “the market value of MSTR’s bitcoin holdings and the value of its enterprise analytics software unit.” Palmer reiterated his buy rating and $950 price target.

Still, the impairment could have had some impact on Saylor’s role change, according to some crypto industry participants.

“There was no doubt that there was going to be external pressure from stakeholders to see some sort of response from the company,” said Tanim Rasul, chief operating officer of crypto trading platform NDAX.

Rasul said Saylor was a key proponent in advocating for corporate bitcoin adoption, although impairment losses may have spooked other publicly traded companies, especially considering the uncertainties across the global economy and markets.

MicroStrategy is one of the more well known institutional investors of Bitcoin that has stayed consistent with its bullish position on Bitcoin.

In fact, the company demonstrated its confidence when it revealed that it would be the first company to adopt Fidelity’s new Bitcoin based 401(k) retirement plan which stirred a lot of controversy.

Additionally, it seems that the company has also run into some trouble with the SEC in the past due to the way that it reported its Bitcoin filings.

With that being said, this was not the first time that the SEC had probed into MicroStrategy and this was also done many years ago.

TheVerge concludes:

In April, Saylor announced that MicroStrategy would be the first company to adopt Fidelity’s Bitcoin-based 401(k) retirement plan for its employees.

The Securities and Exchange Commission opened an investigation into MicroStrategy, as it objected to the way the company accounted for its Bitcoin in one of its 2021 filings.

As noted by Bloomberg Tax, Microstrategy used non-GAAP measures to record its Bitcoin assets, which aren’t based on the Generally Accepted Accounting Principles (GAAP). Companies typically use non-GAAP methods sparingly.

MicroStategy was also the subject of an SEC investigation over allegations of civil accounting fraud back in 2000.

The SEC accused Saylor and his top executives of overstating the company’s revenue and earnings after it went public in June 1998 up until March 2000. Saylor and two of his executives settled with the agency for $11 million, with none of them “admitting or denying the Commission’s allegations.”

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