Mark my words, $MSTR gonna run up 30%+ next week.
Currently at $1,238.
What is happening next week that might drive up the price? ER??
Earnings, which I think they will 5x the estimates just based on the new accounting rules.
Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.
This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.
The company is currently undervalued due to accounting rules. As I understand it...
Current State: You buy BTC at $70k. BTC value craters to $30k. You have to re-evaluate the carrying value of that crypto (annually, I believe), and if it is impaired, you recognize that loss as a reduction of pre-tax income (You just lost $40k * # of BTC you hold).
If that crypto then goes back up to $70k by the point your annual re-valuation takes place, it's obviously good for your company, but right now you can't recognize that increase in the value of your impaired BTC. They remain valued at $30k on your balance sheet.
Think about the volatility in crypto. For a company like MSTR, that means their balance sheet for the BTC they've held since '21-'22 reflects values significantly below current value.
Revised Rules: Effective in 2025, but apparently able to be implemented sooner, companies are allowed to switch to a Fair Value methodology. Companies like MSTR must revalue quarterly to recognize the Fair Value of their crypto. So those shares that have been on heir balance sheet at $30k will immediately snap back to $60k+ on their balance sheet going forward. They become a much more valuable company by accounting standards. And that increase in value will pass through to their bottom line as income.
It doesn't change the "real" value of the company. But lots of accounting requirements cause divergence between balance sheet value and liquidation value, and they can swing both ways.