MicroStrategy Stock Price Surges And Eyes $400 Despite MSTR Risk Warnings

MicroStrategy stock price has rebounded from the recent downturn amid a broader recovery on Wall Street and Bitcoin price. Over the last two months, the MSTR stock price has remained range-bound amid doubts over the sustainability of the company’s debt. Also, news of company executives offloading their stock has also dampened the bullish sentiment.

Will MicroStrategy Stock Recover From Here?

After falling under $300 on the last trading day of December, the MicroStrategy stock has recovered more than 10% so far despite turbulence in the US equity market. For the last two months, it has been largely trading between the support of $320 and the resistance of $400.

Furthermore, the stock has also seen selling activity from company executives. Just as the MSTR share price surged to its all-time high of $473, several executives offloaded part of their MSTR holdings.

On November 6, Andrew Kang, Senior Executive Vice President and Chief Financial Officer of MicroStrategy Inc., sold 5,700 shares of Class A Common Stock.

On the same day, Jeanine Montgomery, the company’s Senior Vice President and Chief Accounting Officer, sold 56,250 shares at prices ranging from $255.04 to $260.75, totaling approximately $14.48 million. Following the transaction, Montgomery retained 5,670 shares.

Additionally, Bitcoin advocate and Executive Chairman Michael Saylor has also been reducing his holdings, selling 350,000 shares of the company over the past year. MicroStrategy has also been doing stock issuance to raise funds and purchase more Bitcoins.

Earlier on Monday, Michael Saylor announced buying Bitcoin worth $243 million, raising the total Bitcoin holdings to 450,000. On the technical chart, MSTR shows signs of a breakout, which could take it back to its all-time highs again.

This is where the aping begins for $MSTR …. #Bitcoin pic.twitter.com/UjGz9PWXA4

— Josh Man (@JoshMandell6) January 10, 2025

Will MSTR Sail Through Debt Risks?

MicroStrategy’s bond risk continues to escalate as concerns grow over its zero-percent convertible bonds. With a current market capitalization of approximately $84 billion, the company has accumulated over $4 billion in debt, while its 450,000 BTC holdings are valued at just over $43 billion.

Doubts are mounting over MicroStrategy’s ability to repay its bonds—debt issued specifically to purchase Bitcoin—since the company has stated it has no plans to sell its BTC reserves. The bond risk now stands at an alarming $7.27 billion in convertible debt.

Amid the crypto-backed debt, Market analyst Rishabh Mishra has warned investors from gaining big exposure to MicroStrategy stock amid the recent drop in BTC price over the past month. The company’s cryptocurrency strategy hinges on Bitcoin maintaining stable prices. A sharp drop in Bitcoin’s value could significantly impact MSTR shares negatively.

“If the BTC prices were to fall sharply, the shares of its levered play MSTR will decline too, leading to an erosion in its market capitalization,” explains Mishra.

Hedge Funds See New Opportunity?

Despite the risks surrounding a huge debt, hedge funds and institutional players have increased their MSTR stock holdings. Brookstone Capital Management increased its stake in MicroStrategy Incorporated (NASDAQ: MSTR) by 32.6% in the fourth quarter, as per its latest US SEC Form 13F filing.

The firm added 3,303 shares during the period, bringing its total holdings to 13,429 shares of the software company. At the end of the reporting period, Brookstone’s investment in MicroStrategy was valued at $3,889,000.