What Happened?
Shares of bitcoin development company MicroStrategy (NASDAQ: MSTR) fell 2.3% in the afternoon session after a broader cryptocurrency market downturn and comments from CEO Michael Saylor about potentially selling Bitcoin to fund dividends.
The crypto market stumbled, with its global market cap slipping and top assets like Bitcoin dropping 0.6% to trade around $116,601. This broad weakness hit digital asset stocks, with peers also trading in the red.
Compounding the issue, MicroStrategy's CEO Michael Saylor remarked at an event that in a "worst-case scenario," the company might sell Bitcoin to cover dividend payments. The comment drew sharp criticism from short-seller Jim Chanos, who labeled the idea "financial gibberish." This news fed into existing investor worries about the company's heavy use of share sales to raise funds and a shrinking premium on its stock compared to the value of its Bitcoin holdings.
The shares closed the day at $344.76, down 1.2% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy MicroStrategy? Access our full analysis report here, it’s free.
What Is The Market Telling Us
MicroStrategy’s shares are extremely volatile and have had 72 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 1 day ago when the stock gained 7.3% on the news that investors scooped up equities, shaking off the initial concerns inferred from the Fed's dot plot, with tech stocks leading the charge.
As a reminder, the Federal Reserve cut its benchmark interest rate by 25 basis points yesterday and signaled that more reductions could come before year-end and beyond. Initially when the cut was announced and Fed Chair Powell held his press conference, there was a pullback in the market as the Fed's "dot plot" revealed that only one cut was likely for 2026. This was below the three cuts that had been priced into the markets. This was the first interest rate cut of 2025, a move investors had widely anticipated. In response to the decision, stocks rose significantly, positioning major indexes like the S&P 500 and Nasdaq to open at record levels.
The Fed's decision was influenced by signs of a weakening labor market. Lower interest rates are generally seen as positive for stocks because they reduce borrowing costs for businesses and make fixed-income investments like bonds less attractive by comparison, driving capital into the equity market. While Fed Chair Powell noted the path forward has risks, the prospect of looser monetary policy has fueled optimism on Wall Street.
MicroStrategy is up 15.1% since the beginning of the year, but at $345.19 per share, it is still trading 27.1% 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 $22,686.
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