How Will Bitcoin React to Michael Saylor’s 10-for-1 MicroStrategy Stock Split?

Bitcoin billionaire Michael Saylor revealed on Thursday that MicroStrategy (MSTR), his Bitcoin-focused business intelligence firm, is enacting a 10-for-1 stock split. This move aims to make the company’s high-value shares more accessible to smaller investors.

MicroStrategy’s Accessibility Boost with Stock Split

MicroStrategy announced that the stock split would occur via a stock dividend to shareholders of record for both Class A and Class B common stock as of August 1, 2024. Each shareholder will receive nine additional shares for every share they own. The split will take effect after trading closes on August 7, with split-adjusted trading commencing on August 8.

A stock split does not alter an investor’s ownership percentage or portfolio value but significantly reduces the price per share. This can appear alarming on stock charts without proper context.

Joe Burnett, Senior Product Marketing Manager at Unchained, commented that the split would enable smaller investors to participate in trading MSTR options, potentially leading to increased demand for the stock.

MicroStrategy: The High-Flying Bitcoin Stock

At the close of trading on Wednesday, MSTR shares were priced at $1305, with a peak of $1919 in late March. Following the split announcement, the stock rose 5% in pre-market trading to $1364. Over the past year, MSTR shares have surged by 216%, serving as a leveraged proxy for Bitcoin investments.

MicroStrategy is the largest corporate holder of Bitcoin, possessing 226,331 BTC ($13.33 billion) on its balance sheet, financed through debt and share dilution. The company’s market cap stands at $23.16 billion, reflecting a premium over its Bitcoin holdings.

In March, Kerrisdale Capital criticized this premium as “unjustifiable” and predicted a 50% drop in MicroStrategy’s stock value relative to its Bitcoin assets.