What Happened?
Shares of business analytics software company MicroStrategy (NASDAQ:MSTR) jumped 6.7% in the pre-market session after 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.
After the initial pop the shares cooled down to $425.69, up 4.1% from previous close.
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What The Market Is Telling Us
MicroStrategy’s shares are extremely volatile and have had 95 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 26 days ago when the stock gained 15% after the company announced the pricing of a new private offering of $2.6 billion in convertible senior notes due in 2029. MicroStrategy intends to use the net proceeds from the issuance to accelerate its Bitcoin purchases.
When examining the relationship between MicroStrategy's stock price and the rising price of Bitcoin, it remains unclear whether the stock influences Bitcoin's improved price momentum or vice versa. However, the market's reaction suggests that optimism remains strong in light of the company's ongoing Bitcoin acquisition strategy.
MicroStrategy is up 521% since the beginning of the year, but at $425.69 per share, it is still trading 10.2% 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 $29,048.
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