Strategy Buys Almost $1 Billion Worth of Bitcoin. Why It Could Be a Good Sign for the Stock. — Barrons.com
By Nate WolfStrategy, the world's largest corporate holder of Bitcoin, snatched up nearly $1 billion worth of the cryptocurrency last week — a welcome sign for frustrated shareholders.In a securities filing Monday, the company formerly known as MicroStrategy disclosed that it had bought 10,624 tokens from Dec. 1 to Dec. 7 at an average purchase price of $90,615. The $962.7 million haul brings Strategy's total Bitcoin holdings to more than $60.6 billion.Strategy stock was up 1.9% to $182.38 in premarket trading Monday.The purchases mark a turnaround from the previous two weeks. Strategy added just 130 tokens in the period from Nov. 17 to Nov. 30, opting to sit on the sidelines amid a dramatic pullback in Bitcoin. The flagship cryptocurrency rose to $91,611 on Monday, but remains down 27% from its October all-time high above $126,000.The filing Monday indicates Strategy and its executive chairman, Michael Saylor, are now buying the dip, which may be good news for the struggling stock.As of Friday's close, Strategy shares have tumbled 61% from their July record high. Its so-called mNAV, the multiple the company trades at relative to its Bitcoin holdings, also has deteriorated.But Strategy buying up Bitcoin signals the company is confident its purchases can expand that mNAV premium."MSTR's model is to acquire Bitcoin when it is accretive to do so, irrespective of Bitcoin's price," wrote Cantor Fitzgerald analysts Brett Knoblauch and Gareth Gacetta in a research note last week, before the filing Monday. The firm reiterated an Overweight rating but cut its price target to $229 from $560.The purchases also indicate Strategy remains bullish about the direction of Bitcoin itself. As investors have learned this year — for better or worse — wherever Bitcoin goes, Strategy stock goes with it.Write to Nate Wolf at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.