MicroStrategy’s Stock Performance After Split
Shares of MicroStrategy (MSTR) opened at $131 on Thursday, reflecting a significant decline of 89.4% from the previous day’s closing price. This dramatic change is not attributed to a market downturn or widespread selling, but rather to a previously announced stock split that has now been implemented.
The Mechanics of the Stock Split
A stock split occurs when a company increases its total number of shares by distributing new shares to existing shareholders in proportion to their current ownership. Last month, MicroStrategy disclosed plans for a 10-for-1 stock split that would take effect after trading on August 7, granting investors nine additional shares for every share they owned as of August 1.
This increase in share count naturally led to a decrease in individual share prices once trading resumed under the adjusted terms on Thursday. Despite this price drop, each investor’s overall ownership in the company remains unchanged. This move also lowers the entry cost for new investors looking to invest in MicroStrategy.
Investor Insights on the Split
Bitcoin educator Rebecca Goodwill took to Twitter on Thursday to explain the implications of the stock split. She noted, “A stock split is designed to make the stock price more accessible to new investors.” Goodwill added, “While it won’t make you wealthy instantly, it indicates that the company has outperformed the market, necessitating a price reset, and suggests that the company is preparing for its next phase of growth.”
MicroStrategy’s Bitcoin Assets
In the lead-up to the stock split, MSTR shares were valued at $1,246 each. Earlier this year, the stock reached a peak of $1,919, driven by increasing Bitcoin prices following the introduction of U.S. Bitcoin ETFs on January 11.
Currently, MicroStrategy holds 226,500 BTC in its portfolio, valued at approximately $13.12 billion based on current market rates. The company’s market capitalization stands at $25.4 billion, according to Yahoo Finance, roughly double the value of its Bitcoin holdings.
The company has built its Bitcoin reserves by utilizing capital markets, including issuing new shares and taking on low-cost debt. Prior to announcing its first Bitcoin acquisition in August 2020, MicroStrategy shares traded for $123 each—similar to today’s pricing, but without any stock splits.
The Influence of MicroStrategy on Other Companies
Other firms, such as Semler Scientific and MetaPlanet, have followed MicroStrategy’s lead by integrating Bitcoin into their financial strategies. In contrast to MicroStrategy’s approach, MetaPlanet recently executed a 1-for-10 reverse stock split, which increased its share price tenfold.
