MicroStrategy revealed an overall deficit of $90 million or $8.43 an offer in the fourth quarter, missing agreement gauges for a benefit of 89 pennies a share.
The loss appears largely due to MicroStrategy’s inclusion of impairment losses on its Bitcoin, amounting to $147 million. That more than wiped out the company’s $110.5 million gross profit from its software business.
The shares were down 0.8% in after-hours trading to around $370.
MicroStrategy is present to a great extent a bet on Bitcoin. The organization utilized returns from convertible debt and equity contributions all through 2021 to keep adding to its Bitcoin assortment.
The company bought more than 10,300 Bitcoins in the quarter and another 660 in January, taking its total to 125,051 Bitcoins.
“Today, MicroStrategy is the world’s largest publicly traded corporate owner of Bitcoin,” CEO Michael Saylor said in an earnings release.
Michael Saylor again added, “We will continue to evaluate opportunities to raise additional capital to execute on our Bitcoin acquisition strategy.”
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The company said in its earnings report that its average cost was $30,159 per coin at a total cost basis of $3.7 billion. At a recent price of $38,800 per coin, its tokens were worth $4.85 billion on Tuesday.
MicroStrategy had faced scrutiny from the Securities and Exchange for its accounting of Bitcoin. The SEC had objected to MicroStrategy’s exclusion of impairment charges on Bitcoin holdings from its non-GAAP operating income.
The company said it would include the charges in a response to the SEC.
MicroStrategy’s losses might look worse than they really are. The company is required to take impairment losses on its Bitcoin if the price falls below their carrying value during the quarter, according to BTIG analyst Mark Palmer.
The losses can’t be reversed even if the price subsequently recovers, Palmer wrote in a recent note.
“We view the impact of the charges stemming from such impairments as essentially meaningless to MSTR ‘s inherent value, which stems from the actual value of its Bitcoin holdings as well as the value of its business intelligence software unit,” Palmer said in a note in late January.
MicroStrategy’s equity value of $3.8 billion is now well below the market value of its Bitcoin, though that doesn’t factor in nearly $2.2 billion of long-term debt including convertible notes that may be converted into equity.
The stock has been hit hard by the accounting issues and Bitcoin’s weak prices this year. Bitcoin is down 17% in 2022, weighing on MicroStrategy stock, which is off 31% this year through Tuesday’s close.