Partnered With:

Citibank Downgrades MicroStrategy to Sell on Aggressive Approach to Bitcoin

Read this article in 4 Minutes

MicroStrategy intends to issue 400 million bonds to buy Bitcoin, and Citibank believes that its behavior is "aggressive."

Rhythm BlockBeats news, recently, an analyst at Citigroup (Citigroup) adjusted the stock rating of MicroStrategy, a listed company in the United States, to "sell", recommending its clients to sell MicroStrategy stock. The bank previously had a “neutral” rating on MicroStrategy stock.

Rhythm previously reported that MicroStrategy had announced in the middle of this year that it had purchased a large number of bitcoins. Just over 40,000 pieces. MicroStrategy's stock rose after announcing the purchase of Bitcoin as its asset reserve.

However, Citibank does not seem to approve of the company's stock rise. In a note to clients, Citibank said the recent rally in MicroStrategy stock was "overextended," and said its plan to raise $400 million in convertible bonds to buy bitcoin was "aggressive" and could be "aggressive." a means of breaking deals".

“After the close, MicroStrategy announced that they plan to issue $400 million in convertible bonds to buy more bitcoin Although the size of MSTR’s previous bitcoin investment (approximately $450 million) was essentially unprecedented, at least it was purchased with excess cash and at a time when bitcoin prices were low (the average purchase price of bitcoin was about At $11,000, the current price is about $19,000). Issuing new debt to fund bitcoin purchases is aggressive and a potentially deal-breaker for software investors who may be concerned that they now own more High-risk asset management business.”

The downgrade recommendation sent MicroStrategy's shares down more than 13.9% on Tuesday.

At the same time, Citibank also analyzed that the recent behavior of the company’s management to sell shares may indicate that the company’s top management does not It does not support its CEO's endless purchase of bitcoins. Over the past two months, the company's stock sell-off topped $50 million. According to JPMorgan, the largest share sale was executed by President/CFO/COO Phong Lee, who sold almost all of his shares.