Key Takeaways
- Strategy stock fell 9% today after a record $6.3 billion hack at Binance sent bitcoin below $80,000.
- Coinbase, Robinhood, Riot Platforms and Circle fell with it.
- Strategy’s record third quarter came almost entirely from a gain on its bitcoin, which now trades only about 3% above Strategy’s average cost.
- Strategy has the cash to wait, and MSCI’s Nov. 11 index decision is the next test.
Strategy (MSTR) fell 9% today, a day after its record quarter, as a hack at Binance dragged bitcoin below $80,000.
The rest of crypto fell too. Circle Internet Group (CRCL) froze some of the stolen money. Coinbase (COIN) and Robinhood Markets (HOOD) had just reported slower crypto trading. And Riot Platforms (RIOT) gets less for every coin it mines.
Bad timing for a bull market call
Binance said about $6.3 billion of client assets were hit, the biggest crypto hack on record. It has pledged to cover the losses, but bitcoin still fell more than 4%, to about $78,000.
That came hours after Strategy’s third-quarter report: net income of $19.5 billion, or $44.75 a share, almost all of it from a $20.9 billion gain on its bitcoin.
“We’re at the beginning of the next bitcoin bull market,” Executive Chairman Michael Saylor said in the release.
But that gain swings both ways, as Strategy’s net income shows:
And the cushion is…pretty thin. Strategy paid about $75,446 per coin for its 848,517 bitcoin, so today’s price is only about 3% above its cost. Revenue also missed, and CFO Andrew Kang leaves on Nov. 5.
Strategy can afford to wait
Cash and short-term investments reached $5.9 billion at Sept. 30, close to Strategy’s $6.8 billion of debt:
Strategy says its USD assets cover 3.4 years of dividends and interest, so it doesn’t need to sell bitcoin here. The bigger claim is $14.1 billion of preferred stock ahead of the common, paying dividends forever.
TIKR tracks 15 analysts on Strategy. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Strategy, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Strategy’s Analyst Ratings
Crypto’s other casualties
Coinbase fell after reporting third-quarter revenue down 35% from a year earlier, to $1.22 billion. I’d guess some Binance traders move over, but that’s a slow fix.
Robinhood slid as well, though crypto was just $120 million of its $1.42 billion in third-quarter revenue. Circle lost ground even after CEO Jeremy Allaire said it froze more than $800 million in USDC tied to the hack. (That is, by the way, a point in USDC’s favor.)
Riot Platforms dropped as well ahead of its Nov. 4 call. The question there is what bitcoin below $80,000 does to its fourth quarter.
My take: Saylor’s bull market may still come, maybe, eventually, and Strategy can wait for it. But with bitcoin this close to its cost, the stock is a leveraged bet on a quick rebound.
Of course, Binance reopening withdrawals could calm things fast. Then comes MSCI’s Nov. 11 list.
So what is Strategy stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Strategy could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
