MicroStrategy stock slides as the SEC rejected its Bitcoin accounting strategy

Amid the crypto marketplace meltdown, MicroStrategy banal slid arsenic overmuch arsenic 15% earlier equity markets rebounded precocious Monday–following the US Securities and Exchange Commission (SEC) objecting to the company’s Bitcoin accounting strategy.

The recently released filings amusement that the SEC rejected however Michael Saylor’s bundle institution accounts for its crypto holdings.

Unfavorable accounting ruling by the SEC

MicroStrategy banal extended its two-day diminution to astir 30% connected Monday, successful the aftermath of a December filing released past Thursday.

According to the filing, the fiscal regulator rejected the accounting method the institution uses for Bitcoin successful its net reports.

“We enactment your effect to anterior remark 5 and we entity to your accommodation for Bitcoin impairment charges successful your non-GAAP measures,” the filing said, instructing the institution “to region this accommodation successful aboriginal filings.”

The institution started acquiring Bitcoin arsenic portion of a superior allocation strategy backmost successful 2020, and has continued stacking up ever since–essentially turning MicroStrategy’s shares into a proxy for the crypto.

The SEC’s objection fundamentally prevents the institution from stripping retired the volatile swings successful Bitcoin terms from its unofficial non-GAAP accounting reports.

According to MicroStrategy’s October filing, it has been reporting non-GAAP income from operations and non-GAAP nett income that “exclude Bitcoin impairment losses to amended alteration a comparison” of the company’s show crossed reporting periods.

MicroStrategy’s Bitcoin

As of the extremity of 2021, the institution held 124,391 Bitcoin, purchased for astir $3.75 cardinal astatine an mean terms of astir $30.159, MicroStrategy CEO, Michael Saylor, revealed connected Twitter astatine the extremity of December.

MicroStrategy has purchased an further 1,914 bitcoins for ~$94.2 cardinal successful currency astatine an mean terms of ~$49,229 per #bitcoin. As of 12/29/21 we #hodl ~124,391 bitcoins acquired for ~$3.75 cardinal astatine an mean terms of ~$30,159 per bitcoin. $MSTRhttps://t.co/tNxDwaT8VD

— Michael Saylor⚡️ (@saylor) December 30, 2021

Saylor, who, similar galore crypto investors connected Twitter turned to memes and wit for easing the play of the marketplace downturn, precocious changed his illustration picture–joking astir his adjacent vocation if his Bitcoin holdings tank.

May use for nighttime displacement astatine @TheRealTahinis to stack much sats. #NewProfilePic pic.twitter.com/ZrirLojvrq

— Michael Saylor⚡️ (@saylor) January 23, 2022

On a broadside note, Tahinis prides itself of being the world’s archetypal edifice concatenation to put 100% of its currency reserves into Bitcoin.

Saylor told Bloomberg past week that the institution volition ne'er merchantability its Bitcoin.

“Never. No. We’re not sellers. We’re lone acquiring and holding bitcoin. That’s our strategy,” Saylor said, adding that helium is not disquieted astir the terms diminution from $69,000 successful November to little than $40,000 this month.

“So, I don’t truly deliberation we could bash thing amended to presumption our institution successful an inflationary situation than to person our equilibrium expanse into Bitcoin,” said Saylor, arguing that crypto is inactive the champion defence against inflation.