MicroStrategy Stock Drops 8% on 'Leveraged' BTC Gambling Fears

MicroStrategy's (MSTR) share price plunged 8% after the company purchased $209 million worth of bitcoin (btc) amid growing concerns about the company's “leveraged” gambling.

MSTR lost over $27 during yesterday's trading session, according to data from <a target="_blank" href="https://www.google.com/finance/quote/MSTR:NASDAQ?sa=x&ved=2ahUKEwjdooD1q9GKAxWoU0EAHRcFC7MQ3ecFegQIQRAf”>Google Finance. The bleeding continued during after-hours trading, with MicroStrategy shares falling an additional 3%.

MicroStrategy Stock Heavily Leveraged Through Convertible Notes and Debt Issuances

Kobeissi's letter shared concerns about MicroStrategy's proposed 10 billion authorized share increase in a Dec. 30 x post. According to the trading resource, MSTR has been heavily leveraged through a combination of convertible notes and debt issuances.

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Something doesn't add up here:

microstrategy, <a target="_blank" href="https://twitter.com/search?q=%24MSTR&src=ctag&ref_src=twsrc%5Etfw”>$MSTRhas been known as the most popular “leveraged” <a target="_blank" href="https://twitter.com/hashtag/bitcoin?src=hash&ref_src=twsrc%5Etfw”>#bitcoin work of the year.

Meanwhile, over the last month bitcoin has gained +2% while <a target="_blank" href="https://twitter.com/search?q=%24MSTR&src=ctag&ref_src=twsrc%5Etfw”>$MSTR currently it is down almost -50%.

What is happening? Let's explain.

(a thread)

— Kobeissi's letter (@KobeissiLetter) <a target="_blank" href="https://twitter.com/KobeissiLetter/status/1873830239262171422?ref_src=twsrc%5Etfw”>December 30, 2024

So that Microstrategy To keep up your bitcoin buying spree, you will need to issue even more debt or equity. If the company's request to increase the number of authorized shares is approved, the total number of shares “would increase from 330 million to 10.33 billion,” according to The Kobeissi Letter.

In such a case, MicroStrategy could find itself in a “lose-lose” situation, The Kobeissi Letter <a target="_blank" href="https://x.com/KobeissiLetter/status/1873830250632929478″>warned.

Analyst warns that MSTR will eventually “implode”

Hartman Capital founder Helix Hartmann predicts MicroStrategy stock will “eventually implode.”

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My take on Saylor/MSTR: It will eventually implode, but most shorts will miscalculate and blow up bets against btc and MSTR.

Key points:

• Much of MSTR's debt has an interest rate close to 0%, with maturities spread between 2027 and 2030, so neither service nor repayment are short-term…

– Felix Hartmann (@FelixOHartmann) <a target="_blank" href="https://twitter.com/FelixOHartmann/status/1873799700148527532?ref_src=twsrc%5Etfw”>December 30, 2024

He added that MicroStrategy will “eventually go bankrupt,” but added that MSTR will become one of the top five companies by market capitalization before this anticipated implosion.

Hartmann continued <a target="_blank" href="https://x.com/FelixOHartmann/status/1873803937062473993″>predict that the software company will likely go bankrupt between 2028 and 2029. However, he shared a counterargument. In an alternative case, he believes MicroStrategy will be able to comfortably pay out between $1 billion and $4 billion of maturities from 2027 to 2029 if a “raging bull” market drives up the price of btc, leaving MicroStrategy with a reserve of $300 billion.

In the last 24 hours, the price of bitcoin <a target="_blank" href="https://coinmarketcap.com/currencies/bitcoin/”>abandonment more than 1% to trade at $92,648.23 at 1:32 a.m. EST. Despite the correction, btc continues to increase more than 119% so far this year. This has benefited the MSTR, which has increased more than 342% during the same period.

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