What Happened?
Shares of business analytics software company MicroStrategy (NASDAQ:MSTR) fell 6.5% in the morning session after stocks with exposure to the crypto space declined as momentum in the crypto market weakened following a strong rally that began in the weeks leading up to the November 2024 elections.
Investors had hoped for more favorable regulation under a new administration. Although the incoming Trump administration's victory was initially viewed positively, the market now appears to be searching for new catalysts to sustain its momentum.
Additionally, profit-taking by investors may be contributing to the downturn. Notably, Bitcoin—the largest cryptocurrency by market capitalization—fell by more than 10% after reaching a record high of $106,000 on December 16, 2024.
On December 23, 2024, MicroStrategy, often regarded as a Bitcoin proxy due to its substantial cryptocurrency holdings, announced the acquisition of 5,262 bitcoins at an average price of $106,662.
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What The Market Is Telling Us
MicroStrategy’s shares are extremely volatile and have had 98 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 6.7% on the news that Bitcoin, the largest cryptocurrency by market value, hit a new all-time high over the weekend, climbing past $106,000. Meanwhile, MicroStrategy disclosed a significant expansion of its Bitcoin holdings in the previous week, acquiring 15,350 Bitcoins for roughly $1.5 billion at an average price of $100,386 per coin.
Separately, Nasdaq announced that MicroStrategy will be added to the Nasdaq-100 Index. The official inclusion is set for December 23, 2024. This addition to the index may attract interest from mutual funds and ETFs, potentially increasing demand for MicroStrategy's stock.
MicroStrategy is up 409% since the beginning of the year, but at $348.45 per share, it is still trading 26.5% below its 52-week high of $473.83 from November 2024. Investors who bought $1,000 worth of MicroStrategy’s shares 5 years ago would now be looking at an investment worth $24,143.
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