MicroStrategy CEO Michael Saylor said he would step down from the top job next week and assume the role of executive chair, as his company reported a loss of $1.06bn in the second quarter.
Phong Le, the company’s president, will become CEO while keeping his current duties, MicroStrategy said in a press release. As executive chairman and chair of the board of directors, Saylor will focus on long-term corporate strategy and the company’s bitcoin acquisitions, the company said.
MicroStrategy stock fell 2.6% to $271 in after-hours trading.
The management shake-up came after a dismal quarter for the enterprise software company, driven mostly by the company’s mammoth bitcoin holdings. At the end of June, the company held 129,699 bitcoins on its balance sheet with an average purchase price of $30,664, well above the digital token’s current price of about $23,000. For the quarter, MicroStrategy said bitcoin’s plummeting market value accounted for about $918m of its losses.
MicroStrategy’s nominal business is selling business analytics and intelligence software, but in 2020, Saylor made the radical decision to invest the company’s balance sheet in bitcoin. Today, its stock is driven mostly by those holdings, whose market value at the end of June stood at about $2.45bn.
The second quarter was one of the roughest three-month periods for bitcoin since its creation in 2009. Tighter financial conditions driven by the Federal Reserve helped lead to the collapse of several major crypto projects and a dramatic fall in bitcoin’s price. Since peaking at about $68,000 in November, bitcoin has lost nearly two-thirds of its value.
Saylor in the company’s earnings call on 2 August defended the decision to sink the company’s assets into bitcoin, pointing to the outperformance of MicroStrategy stock compared with competitors and other assets since the August 2020 move.
On the call, Saylor argued that MicroStrategy’s enterprise software business and bitcoin investment business are essentially two separate companies and that the new structure, with Le in charge of software, reflects that. But for investors considering the company’s stock, increasingly it’s only the bitcoin investments that matter.
Write to Joe Light at [email protected]
This article was published by Barron’s, part of Dow Jones