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Is a New CEO Enough to Save MicroStrategy (MSTR) Stock?

  • Bitcoin (BTC-USD) bull Michael Saylor stepped down as CEO of MicroStrategy (MSTR).
  • Over half of MSTR stock is now being held short.
  • Despite the change, MicroStrategy remains a Bitcoin play.
MSTR stock - Is a New CEO Enough to Save MicroStrategy (MSTR) Stock?

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MicroStrategy (NASDAQ:MSTR) CEO Michael Saylor, who bet the company on Bitcoin (BTC-USD), is stepping into an executive chairman position and MSTR stock is reviving.

Saylor risked margin calls to double down on the company’s cryptocurrency investments, even as Bitcoin has fallen from a high of $67,000 to a recent price of $23,000. The revival of the stock may be due to Bitcoin’s own rise from a low of less than $20,000 to the current price.

Saylor said in his new role, he will focus on the cryptocurrency strategy for the company.

Saylor Away

The news of Saylor’s move, reported by the cryptocurrency news site Blockworks, led to speculation that MicroStrategy might sell its Bitcoin. The company’s entire $3.14 billion market cap is based on its BTC holdings.

MicroStrategy spent $4 billion on its Bitcoin holdings, which now have a market value of about $3 billion. The company acknowledged a loss of $917 million in its second-quarter earnings report.

Before becoming a Bitcoin play, MicroStrategy sold analytics software. But revenue softened long before Saylor made himself a Bitcoin bull. Sales for 2021 were just 2% ahead of those in 2018 at about $500 million. Revenues for the second quarter were about $122 million, down 2% from a year ago but up slightly using constant currency.

What Happens Next in MSTR Stock

Phong Le, who joined MicroStrategy in 2015, is the new CEO. He led the software division to decent results in 2021.

For now, MicroStrategy remains a Bitcoin play. A market cap of $3 billion on a money-losing company with sales of $500 million is not what the market wants. The best hope may be in its large short position. S3 Partners reports more than half the stock’s shares are being held short. Those shorts can be squeezed, assuming Bitcoin prices don’t start rising again.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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