Why MicroStrategy (MSTR) Over Coinbase (COIN)
$MicroStrategy(MSTR.US$ s bitcoin holdings reach 205,000 BTC with latest purchase, exceed BlackRock's ETF
MicroStrategy has purchased another 12,000 bitcoins for $821.7 million in cash, increasing its total bitcoin holdings to 205,000 BTC. Michael Saylor's MicroStrategy acquired around 12,000 more bitcoins for roughly $821.7 million in cash, increasing its total bitcoin holdings to 205,000.
MicroStrategy Technical Analysis
If we look at the daily intra chart, we can see that Bull power is gathering and the MACD is also moving in an upward trend. This would mean that we could be seeing MicroStrategy creating another new high if Bitcoin continue its rally towards the intrinsic value at $81,000.
MicroStrategy Is Top At Corporate Bitcoin Entry Value
The total Bitcoin holdings from MicroStrategy surpasses the holdings of the largest BlackRock's spot bitcoin exchange-traded fund, which stands at 197,943 BTC.
On Monday, it was reported that MicroStrategy's latest acquisition took place from Feb. 26 to Mar. 10, 2024, at an average price of around $68,477 per bitcoin. MicroStrategy bought the latest bitcoins using $781.1 million from the proceeds of a recent private offering of convertible senior notes, along with $40.6 million of excess cash.
MicroStrategy’s aggregate purchase price of all bitcoins is around $6.91 billion, while its current market value is above $14.7 billion. The price of bitcoin has surged this year, reaching around $72,000, marking a new all-time high. MicroStrategy’s average purchase price per bitcoin stands at around $33,706, inclusive of fees and expenses.
This has made them top when compared to corporate who are holding Bitcoin, as seen in chart below.
Coinbase Selling Convertible Senior Notes To Cover Debts and Costs
$Coinbase(COIN.US$ is selling convertible senior notes to cover its previous debts and operational costs. They are doing this when crypto and its stock prices soar.
This might sound like a good plan to seize on a chance to get debt while its stock price is near its 26-month high in the wake of a crypto rally,
Coinbase announced plans on 12 Mar (Tuesday) to sell $1 billion in debt to institutional investors. This move aims to shore up funds to repay its existing debts and cover its corporate costs. The sale of the notes, which would mature in 2030, could add up to $1 billion to the company's liabilities, bringing its debt to $4 billion.
We need to understand that convertible notes have the potential to be dilutive and dilute earnings per share (EPS) when they are converted into shares. Moreover, conversion by large note holders can lead to a shift in voting rights and control of the company to those new shareholders.
Something I would be monitoring would be the Coinbase valuation after this issue of convertible notes, and how Coinbase stock price might react to it.
Upon maturation, the notes are convertible to Coinbase's Class A stock, cash, or a mix of the two forms of redemption. Investors might be able to buy an additional $150 million worth of notes within the first 30 days of the sale.
Another risk would be the dilution of the current share holdings, but if the stock price can compensate for it, then we might not be too concerned over this.
Coinbase shares traded roughly 1.03% lower in the after-hours session following the announcement on Tuesday (12 Mar), after having gained 0.78% during normal trading hours. Coinbase’s stock remains up more than 40% in the past year amid a strong rally in crypto prices precipitated by federal regulators' approval of a swath of bitcoin-based investment offerings.
Coinbase currently has a market capitalization of $61.58 billion and had $5.4 billion cash on hand as of the end of last year, the company's financial statements show. However, Coinbase is still recuperating from a market implosion that kneecapped crypto prices after the collapse of FTX in November 2022, in addition to the company's ongoing legal battle with regulators in federal court. Last year, Coinbase had $3.1 billion in revenue, down from the roughly $7.8 billion it raked in during the previous crypto bull run in 2021.
The revenue to Volume also decline to 0.62% as of Q4 2023, We might see a better percentage in 2024 Q1, but we will see how Coinbase actually managed to reduce its debt through the senior notes issuance. And also its operating cost need to be curbed.
Summary
If we looked at how MicroStrategy and Coinbase business model allow them to have Bitcoin in them. The way of how to deploy Bitcoin for maximum gain is important, because by holding Bitcoin, it may seem like a good idea when Bitcoin rally.
I would think company high level of dependence of Bitcoin price movement might be key, so I would choose MicroStrategy as they used Bitcoin as a form of investment while their main business is in software. Coinbase on the other hand, is earnings fees and commission on crypto trading, there might be a reduced in trading volume after the halving event, so this might impact Coinbase revenue.
Appreciate if you could share your thoughts in the comment section whether you think MicroStrategy is a better bet than Coinbase?
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Pepperoncino : thank you for this thorough post
William Robinson1 : bought some MicroStrategy for my Grandson and a little for my account, too
BelleWeather : I like the leverage and having Michael Saylor managing the investment, as well. And MSTR has outperformed any and all Bitcoin plays, including Bitcoin itself. Nvidia and Microstrategy were my two best ideas last year, and I weighted them accordingly. The portfolio has some resilience in case MSTR is as volatile as BTC, but if inflows into the ETFs slow, I will derisk day by day to protect t my sanity and gains. But as a buy and hold investor at heart, I will be retiring with MSTR in my portfolio (maybe sooner than planned?
) Good luck!