MicroStrategy Chief Executive Michael Saylor said he would step down from the top job next week and take on the role of executive chairman as his company posted a second-quarter loss of $1.06 billion.
Phong Le, the company’s president, will become CEO while maintaining his current roles, MicroStrategy said in a press release. As executive chairman and chairman of the board, Saylor will focus on the company’s long-term corporate strategy and bitcoin acquisitions, the company said.
MicroStrategy shares fell 2.6% to $271 in after-hours trading.
The management change came after a dismal quarter for the business software company, driven primarily by the company’s huge bitcoin holdings. At the end of June, the company had 129,699 bitcoins on its balance sheet with an average purchase price of $30,664, well above the digital token’s current price of around $23,000. During the quarter, MicroStrategy said the drop in bitcoin’s market value accounted for about $918 million of its losses.
MicroStrategy’s nominal business sells analytics and business intelligence software, but in 2020, Saylor made the radical decision to invest the company’s balance sheet in bitcoin. Today, its stock is driven primarily by those holdings, whose market value at the end of June was about $2.45 billion.
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The second quarter was one of the toughest three-month periods for bitcoin since its inception in 2009. Tighter financial conditions pushed by the Federal Reserve helped lead to the collapse of several major crypto projects and a fall bitcoin price spectacular. Since peaking at around $68,000 in November, bitcoin has lost nearly two-thirds of its value.
Saylor, on the company’s Aug. 2 earnings call, defended the decision to sink the firm’s bitcoin assets, pointing to the outperformance of MicroStrategy’s stock relative to competitors and other assets since of the August 2020 movement.
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, only bitcoin investments matter.
Write to Joe Light at joe.light@barrons.com
This article was published by Barron’s, part of Dow Jones
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