Despite a $27 million loss, MicroStrategy improved in Q3 as Bitcoin remains stable

Despite a $27 million loss, MicroStrategy improved in Q3 as Bitcoin remains stable

Despite posting a net loss for the third quarter, MicroStrategy posted a dramatic improvement over the previous three months amid subdued Bitcoin volatility.

MicroStrategy executives said during an earnings call on Tuesday that the company plans to continue buying and holding Bitcoin with no plans to sell.

The Virginia-based business intelligence company reported a net loss of $27 million in the third quarter, a dramatic improvement from its net loss of $1.1 billion in the previous three-month period.

MicroStrategy's digital asset impairment charges - which come into play when Bitcoin's market value falls below the company's market-adjusted purchase value - were $700,000 in the third quarter, compared to $918 million in the second.

The company's shares rose 5.8% in early after-hours trading in New York. MicroStrategy is down about 54% year-over-year.

MicroStrategy, the largest publicly traded corporate owner of Bitcoin (BTC), holds 130,000 Bitcoins after purchasing 301 BTC in the third quarter. The value of these Bitcoin holdings was nearly $2 billion as of September 30, reflecting approximately $2 billion in cumulative impairment losses since their purchase.

“In light of a potential more severe macro downturn, I believe we have no plans to adjust our Bitcoin strategy,” Chief Financial Officer Andrew Kang said on the call. “We continue to view our investment as a long-term perspective, particularly across cycles... and we will continue to believe in this core principle.”

MicroStrategy Executive Chair Michael Saylor said Bitcoin volatility has improved in recent months. The asset's volatility fell below that of the Nasdaq and S&P 500 stock indexes for the first time since 2020, according to Kaiko data.

“This is really bullish for the asset class and promising,” Saylor said.

Company managers do not address alleged tax evasion

The third quarter results come as MicroStrategy and Michael Saylor are defendants in a lawsuit initiated by the Washington, DC, Attorney General.

Attorney General Karl Racine alleged in September that Saylor personally illegally avoided more than $25 million in D.C. taxes over about a decade by claiming to be a resident in other jurisdictions, including Florida. Racine also alleged that MicroStrategy conspired to evade taxes.

Douglas Gansler, a partner at Cadwalader, Wickersham & Taft - the law firm where whistleblowers first came - told Blockworks the damage could be about $165 million.

Saylor, in a statement sent to Virginia business in September he said he "respectfully disagreed" with the tax fraud allegations, while MicroStrategy said in a statement that the allegations against the company were "false." Eugene Scalia, a partner in the D.C. office of Gibson, Dunn & Crutcher and a former U.S. labor secretary, was scheduled to represent Saylor in the lawsuit.

Company executives did not comment on the lawsuit during the call.

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The post MicroStrategy Records Improved Q3 As Bitcoin Holds Steady Despite Loss of $27 Million is not financial advice.