MicroStrategy

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MicroStrategy Inc.
Microstrategy.png
Founded 1989
Headquarters Tysons Corner, Virginia
Key People Michael Saylor, CEO
Employees 2,400
Products Business software
Twitter @Microstrategy
StockTwits MSTR
LinkedIn Profile
Facebook Page
Website Homepage
Releases Company News

MicroStrategy is a software firm that provides tools for business analytics as well as serves as a speculative bitcoin investment vehicle. While not a cryptocurrency native company, MicroStrategy reportedly became the first publicly-listed company to allocate capital reserves to cryptocurrency when it purchased 21,454 bitcoin in August 2020.[1]

MicroStrategy announced on August 11, 2020 that it had invested approximately $250 million in bitcoin saying, “Our investment in bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders.”[2] The company alluded to its upcoming purchase in its July 28 report on its second quarter 2020 financial results. It also said it would return approximately another $250 million to shareholders.[3]

Since first buying bitcoin during the third quarter of 2020, MicroStrategy has invested over $4 billion into the cryptocurrency. To do that, it has issued corporate debt and convertible bonds, issued stock, and taken out a loan with some of its bitcoin.[4]

On June 7, 2021 the company announced that its subsidiary MicroStrategy Services Corp would offer $400 million in notes in order to purchase bitcoin. At the same time, the company warned that it would be forced to record an impairment for the second quarter of 2021 of at least $284.5 million due to unrealized losses on the bitcoin it had previously purchased.[5]

As of August 2, 2022, the company's cryptocurrency investments held a total market value of $2.9 billion.[6]

Background[edit]

The company was founded by Michael Saylor and Sanju Bansal, former MIT classmates. While working for DuPont as a consultant, Saylor persuaded the company to sponsor his start up software company, MicroStrategy.[7]

One of MicroStrategy's first big customers after DuPont was McDonald's, which gave MicroStrategy a contract for $10 million. After that, the new company moved away from custom software development and produced business intelligence software that could be sold to any number of users. The company expanded and moved its headquarters to Tysons Corner, Virginia, in 1994.

In 2000, Michael Saylor, who was chairman at the time, accepted a penalty of $350,000 personally and $8 million from the company to settle charges of a massive accounting fraud from the U.S. Securities and Exchange Commission. Saylor and two other executives were charged with committing civil fraud. The agency forced the company to restate its earnings for the previous three years during which the company had claimed consecutive profits. The restatement showed the company had much lower revenues than previously reported and in fact had experienced losses each year.[8] MicroStrategy’s price per share free fell $140 in a single day as it fell to $86.75 from the prior day’s close of $226.75 on March 20, 2000.[9]

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