MicroStrategy is set to report Q2 results Tuesday: Here’s what to know
Co-portfolio manager of ETF BLOK said he will be listening for additional clarity on MicroStrategy’s AI efforts after link-up with Microsoft
rafapress/Shutterstock modified by Blockworks
The largest publicly traded holder of bitcoin is set to report its earnings Tuesday — a time when executives have historically reiterated the company’s continuing buy-and-hold strategy.
MicroStrategy held 152,333 bitcoins (BTC) as of the end of June, which were purchased for $4.52 billion, reflecting a price of $29,668 per bitcoin.
Bitcoin’s price — up 76% year to date — was trading at around $29,300 on Monday morning.
MicroStrategy bought 12,333 BTC for $347 million between April 29 and June 27 — an average price of $28,136, the company revealed last month.
Reported all at once in a June 28 filing, that addition to MicroStrategy’s bitcoin stack was its largest acquisition since June 2021, when it acquired 13,005 bitcoins.
“Our core business is not impacted by near-term Bitcoin price fluctuations,” MicroStrategy CEO Phong Le said during the company’s last earnings call in May. “We remain committed to our bitcoin acquisition strategy with a high degree of conviction, long-term focus in a risk-managed approach.”
Guidance to watch for
Dan Weiskopf, a co-portfolio manager of Amplify Investments’ Transformational Data Sharing ETF (BLOK), said he doesn’t expect MicroStrategy’s bitcoin strategy to change. The company is BLOK’s top holding.
Weiskopf will instead be looking for the company to speak about its multi-year partnership with Microsoft that boosts the artificial intelligence (AI) capabilities within its analytics platform, MicroStrategy ONE. The company said in a news release in June that initial use cases could be creating visualizations and dashboards through natural language tools.
“Everyone is buzzing about how the world is going to transform because of AI, but few investors and companies are actually positioned to see revenue growth from AI,” Weiskopf told Blockworks. “This may be the case for [MicroStrategy], but we need clarity.”
MicroStrategy suffered a net loss of $250 million during the fourth quarter of 2022. This was not nearly as bad as the $1.1 billion net loss it posted two quarters before that, as it was hit with digital asset impairment charges of $918 million.
The firm improved its net loss to roughly $20 million in the first three months of 2023, as impairment charges amounted to about $19 million.
Weiskopf said he will also be seeking clarity from MicroStrategy executives on how the Financial Accounting Standards Board (FASB) is going to treat crypto asset reporting.
FASB proposed amendments that would allow entities to measure certain crypto assets at fair value and recognize any fair value changes in net income, rather than have to recognize an impairment loss. Proponents have said these amendments would remove barriers that have kept some companies from carrying BTC on their balance sheets.
MicroStrategy’s earnings call is scheduled two days before Coinbase is set to report its second quarter earnings on Thursday.
Berenberg Capital Markets Analyst Mark Palmer and associate Hassan Saleem said in a May 22 research note — a couple weeks before the SEC launched its lawsuit against Coinbase — that MicroStrategy was an attractive alternative to the crypto exchange.
MicroStrategy’s stock price was about $436 Monday morning — up 200% since the start of 2023. Coinbase’s price has risen 190% year to date.
Berenberg analysts said in a July 12 note that their target price for MicroStrategy was $510 as it raised its estimates for the company’s bitcoin holdings and software business.
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