MicroStrategy, Square and Tesla Capitalize on the Recent BTC Price Dip

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In Brief
  • Fall in BTC this week has affected stocks of Tesla, MicroStrategy and Square.

  • MicroStrategy and Square have purchased more BTC during this period.

  • All three companies began acquiring BTC within the past year.

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The fall in Bitcoin has drastically affected the stocks of companies whose portfolios’ have had large BTC positions. However, companies such as Tesla, MicroStrategy and Square have capitalized on the dip and seem to view it as an investment opportunity.

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Starting off on Tuesday, Feb. 23, Tesla’s stock dropped to the lowest it had traded since September, around $619. As of going to print, it seems to have found support around $720. 

The day prior, Monday, Feb. 22, MicroStrategy’s opening stock price gapped down to $870, from a close of $962 on Friday, Feb. 19, a drop of 9.5%. From there, things took a toll for the worse, as the price that day fell to a low of $664. Another fall, this time over 23%. The stock price has since found support around $800.

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For Square Inc., Monday saw no significant swings in its stock price. However, the following day its opening price had gapped down from Monday’s close of $268 to $250. The stock saw significant volume during its opening hour of trade on Feb. 24. An earnings report contributed to another gapped down the opening price, this time around $244. It is now trading around $240.

MicroStrategy and Square Doubling Down

Despite these market movements, the latter two companies determined to double down on their BTC positions.

On Feb. 23, Square Inc. announced that it had purchased an additional 3,318 BTC, which amounted to $170 million at the time. The financial payment company is run by crypto enthusiasts and Twitter CEO Jack Dorsey.

On the same day, crypto analytics firm skew had highlighted MicroStrategy’s nearly 50% loss since its Feb. 9 peak, the business analytics firm CEO Michael Saylor announced that the company had purchased an additional 19,452 bitcoins for $1.026 billion. MicroStrategy funded the purchase with a sale of senior convertible bonds earlier in February. 

His confidence in BTC unassuaged, Saylor told CNBC, “if you want to save your money for the next decade, it’s logical to do one transaction, put all your money in #btc and wait for a decade and wait for it to go up.”

Institutional Investors Riding That Bull Run

Despite these recent hits, all three companies’ stock has seen a boost since they first started acquiring BTC over the past year.

MicroStrategy first bought 20,000 BTC in August last year for more than $250 million. Since that initial acquisition, its stock price skyrocketed from $141 the day after the purchase to its peak of $1,307 – that’s an astronomical rise of 826%. As of Feb. 24, the company had owned 90,531 BTC, which it had acquired for $2.171 billion at an average price of $23,985 per BTC, according to a tweet from Saylor.

Similarly, Square’s stock was bolstered after establishing its BTC position in October last year. It bought 4,709 BTC at an aggregate purchase price of $50 million on Oct. 8. From the closing price of $188 on the day the purchase was made, the stock has also ridden BTC’s bull run, peaking at $283 on Feb. 16.

Notably, both of these companies’ stocks saw a massive gap up after Tesla purchased $1.5 billion in BTC on Feb. 8. Interestingly, this is one instance where a company influenced the price of BTC, rather than vice-versa. This purchase was largely responsible for BTC’s recent boom and now perhaps the bust.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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