Shares of MicroStrategy, the company led by Michael Saylor, have lost nearly half of their value, reflecting growing concerns about economic challenges and a retreat from cryptocurrency investments. This marks a sharp downturn for the stock, which had seen significant growth following Donald Trump’s election win.
The Fall of MicroStrategy’s Stock
On Monday, MicroStrategy’s stock dropped by 17%, closing at $239.27. This decline follows a dramatic fall of 49.5% from its all-time high of $473.83 in November.
MicroStrategy, which has become a prominent player in the cryptocurrency world due to Saylor’s aggressive Bitcoin investment strategy, has seen its stock price surge alongside Bitcoin’s rise. The company had planned to raise $42 billion in the coming years through borrowing and stock sales to fund further Bitcoin purchases.
Crypto Boom and Bust
The firm’s stock had been outperforming Bitcoin for a time, fueled by speculation that Trump’s administration would create a Bitcoin reserve. However, as Bitcoin has recently struggled and given up many of its earlier gains, MicroStrategy’s stock has mirrored the losses, sinking at a faster pace.
The mood has worsened, especially after the Trump administration clarified last week that the planned Bitcoin reserve would only consist of tokens already owned by the government, with no new purchases authorized under “budget-neutral strategies.”
Broader Market Concerns Impact Crypto
On Monday, Bitcoin fell by around 4%, trading at approximately $80,000. This decline is part of a broader market retreat from risk assets as investors become increasingly concerned about threats to economic growth, particularly regarding Trump’s ongoing trade standoff with Canada, Mexico, and China.
Steve Sosnick, chief strategist at Interactive Brokers, highlighted that the broader risk environment is not favorable for Bitcoin. As a highly leveraged proxy for the cryptocurrency, MicroStrategy is facing its own set of challenges as a result.
Wall Street’s Mixed Outlook
Despite Monday’s sharp drop, MicroStrategy’s stock is still slightly higher than its price on Election Day. Wall Street analysts remain optimistic, with a unanimous “buy” rating from all 11 analysts in a Bloomberg survey. The average price target for the stock is well above last year’s peak, sitting at $540.
However, even before the recent rout, the stock had already lost 28% since the close on January 17, the day before Trump’s inauguration.
Broader Crypto Stocks Struggling
MicroStrategy is not alone in facing significant setbacks. Other cryptocurrency-linked stocks, including Coinbase Global Inc., Galaxy Digital Holdings Ltd., and crypto miners like Riot Platforms Inc., have also experienced declines. From January 17 through Friday, Coinbase’s stock dropped by 26%.
As the crypto market faces increasing volatility, these companies will likely continue to face challenges, with investors taking a more cautious approach to crypto-related stocks.
Related topics:
