Shares of analytics software provider MicroStrategy fell to a year-to-date low following a letter from the U.S. Securities and Exchange Commission (SEC) and a fall in the price of the first cryptocurrency.
On Friday, January 21, MicroStrategy (MSTR) shares closed the session at $376. The decline for the day was 17.8%.
In a letter dated December 3, 2021, published January 20, 2022, the SEC raised concerns about MicroStrategy’s Form 10-Q for the quarterly period ended September 30, 2021.
According to Bloomberg Tax, generally accepted accounting principles (GAAP) in the United States provide no rules for reporting the value of digital assets. The American Institute of CPAs has proposed classifying cryptocurrency as an intangible asset.
Under the recommendation, the company would adjust the value of Bitcoin on its balance sheet when its price declines, but not make corresponding changes when prices rise.
MicroStrategy told investors how the company’s income would look if it did not have to make adjustments under GAAP — $18.6 million versus a reported net loss of $36.1 million.
The analytics software provider said to the SEC that it was using such measures to give investors a fuller picture of its finances.
The U.S. Securities and Exchange Commission objected to the adjustment and required the company to remove it from future filings. In a December 16 letter, MicroStrategy promised to comply with the request.
According to Bitcoin Treasuries, at the time of writing the firm owned 124,391 BTC worth about $4.45 billion, having paid roughly $3.75 billion.
MicroStrategy was among the first public companies to allocate part of its capital to digital gold. In August 2020 the analytics software provider acquired 21,454 BTC (~$250 million at the price at the time of the deal).
On Saturday, January 22, 2022, Bitcoin’s price briefly fell to $34,000.
At the time of writing, the first cryptocurrency was trading around $35,700. The asset’s market capitalization stood at about $678 billion, according to CoinGecko.
Mr. Saylor personally owns about 17,732 BTC (roughly $635 million at the current price).
In January, he confirmed his commitment to a buy-and-hold strategy for Bitcoin, despite a roughly 40% drop from its all-time high.
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