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MicroStrategy Inc. MSTR is considering increasing its leveraged bets on Bitcoin BTC/USD , signaling its readiness to amplify a strategy that has already inflated its Bitcoin holdings to over $14 billion.
What Happened: On Monday, during the first quarter earnings call, MicroStrategys executives championed an intelligent leverage approach to acquiring more Bitcoin.
The companys President and CEO, Phong Le, suggested that if the market value of their Bitcoin increases, it would create more opportunities to manage their leverage targets.
Le said, With the opportunity to take on more leverage in a prudent risk-managed fashion, the value generated from our increasing Bitcoin holdings would be expected to outperform even further if Bitcoin prices continue to rise.
MicroStrategys unconventional strategy involves issuing billions in debt and equity to acquire more Bitcoin whenever prices dip.
The company, a strong believer in Bitcoins long-term potential, held about 214,400 Bitcoins worth $14 billion as of late April after deploying $1.6 billion in cash raised from recent debt and stock offerings to purchase over 25,000 more coins in the first quarter.
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Despite Bitcoins 60% surge in 2024, MicroStrategys leveraged approach has drawn criticism from analysts concerned about the companys heightened risk exposure should prices crash again.
MicroStrategy offered illustrations showing how leverage could boost investor returns exponentially if Bitcoin prices were to theoretically reach $250,000, underscoring the companys conviction in its debt-fueled acquisition strategy.
Executive Chairman Michael Saylor claimed the companys corporate structure and access to capital markets give it a strategic edge over other firms in accumulating Bitcoin.
We are a public company and an operating company, and that gives us flexible, active control over our capital structure, Saylor stated on the call. We wouldnt have been able to raise as much capital without volatility.Loading… Loading…
Why It Matters: MicroStrategy reported its first-quarter financial results, which showed a 5.51% decrease in sales year-over-year. Despite this, the companys Bitcoin holdings have continued to grow.
Saylor has previously highlighted the unique advantages that MicroStrategy has over its competitors, such as the ability to leverage its stock, offer options, and issue convertible debt.
MSTR Price Action:According toBenzinga Pro, MicroStrategy shares are down 2.63% after-hours at $1,259 at the time of publication.
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