MicroStrategy stock tumbles, as bitcoin prices fall well below ‘low watermark’ for carrying value in Q3

Shares of MicroStrategy Inc.
MSTR,
-19.58%
tumbled 14.4% toward a four-month low, in midday trading Wednesday, and has plunged 34.5% amid a three-day losing streak, as the software company-bitcoin play suffered from the recent plunge in bitcoin prices to a two-year low. The company, which makes enterprise analytics and mobility software, is also a bitcoin play since it acquires and holds the cryptocurrency as a treasury reserve. Bitcoin was down 9.1% in midday trading, and has lost 20.3% in three days, putting it on track for the first sub-$17,000 close since Nov. 16, 2020. MicroStrategy disclosed earlier this month that it held 130,000 bitcoins, with a carrying value of $1.99 billion. The carrying value is calculated using the lowest fair value of the bitcoins at any time since their acquisition. And in the conference call following third-quarter results reported on Nov. 1, the company said the “low watermark” for bitcoin was approximately $17,600, suggesting the company will have to record digital-asset impairment charges in the fourth quarter. MicroStrategy’s stock has sunk 43.2% over the past three months, while bitcoin has shed 27.2% and the S&P 500
SPX,
-2.08%
has lost 8.1%.