MicroStrategy announced its Q1 2024 financial report today, which showed a net loss of $53.1 million for the first quarter after accounting for a $191.6 million bitcoin impairment charge. At the same time, Michael Saylor announced that the company had increased its bitcoin holdings by purchasing 122 BTC in April, bringing its total bitcoin holdings to 214,400.
MicroStrategy, the dominant player in bitcoin holdings among US-listed companies, has been one of the biggest winners in the bitcoin bull market, with its stock price skyrocketing over 88.7% so far this year.
However, in the company’s Q1 2024 financial report released today, it reported a net loss of $53.1 million, including a $191.6 million “digital asset impairment charge” for bitcoin, and Q1 revenue also decreased by 5.5% compared to the same period last year, amounting to $115.2 million.
The Q1 financial report does not include billions of dollars in bitcoin gains.
It is worth noting that MicroStrategy did not adopt the new accounting standards for digital assets in its Q1 financial report, so it did not include the billions of dollars in gains from the more than 65% surge in bitcoin in the first quarter in its net profit.
The company stated that it still used the old accounting standards at the end of Q1, with a total valuation of its bitcoin holdings at $5.074 billion, with a book value of $23,680 per coin, reflecting a depreciation loss of $2.461 billion since the purchase. However, if calculated at the closing price of $71,028 per bitcoin in March, the overall market value of its bitcoin holdings would be as high as $15.2 billion.
In December of last year, the Financial Accounting Standards Board (FASB) officially updated the accounting standards for cryptocurrencies, allowing companies to use “fair value” to account for certain cryptocurrencies held on their balance sheets and include the changes in fair value in net income, instead of only using the original purchase price and recording cumulative “impairment” charges. MicroStrategy co-founder Michael Saylor praised this move at the time, believing that it would encourage global companies to use bitcoin as a reserve asset.
During the earnings conference call, MicroStrategy’s CFO stated that the company has fully planned to adopt the new digital asset fair value accounting rules and is currently evaluating the best timing to do so. The FASB’s new version of the cryptocurrency accounting standards will officially take effect from December 15th this year, but companies are allowed to adopt them in advance.
In addition to the Q1 financial report, Michael Saylor also announced today that the company had purchased an additional 122 BTC for $78 million in April, bringing its total bitcoin holdings to 214,400 coins. Based on the current value of bitcoin at $63,628, the total value of its holdings reached $13.6 billion, with an average purchase price of $35,180 per coin, meaning that its bitcoin holdings have a floating profit of $6.1 billion.
Although the company continues to make purchases, the buying momentum in April has significantly decreased compared to previous months. MicroStrategy President and CEO Phong Le commented in the financial report:
After the financial report was released, MicroStrategy’s stock price, MSTR, fell 2.47% in after-hours trading today, closing at $1,261, compared to yesterday’s close of $1,292.97, a decrease of over 32% from the intra-year high of $1,919.16 in late March.
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