Shares of MicroStrategy (MSTR 3.27%) closed Thursday's trading 10.5% lower. The company had no news of its own but the general market tenor pulled down many skyrocketing stocks today. The S&P 500 market barometer fell 2.4% and the tech-heavy Nasdaq 100 index dropped 3.5%. Only 47 of the S&P 500's five hundred components traded higher on Thursday.
MicroStrategy's correction did not occur in a vacuum. The business intelligence company's stock surged 14% higher on Wednesday, paving the way for a quick haircut the next day. Wednesday's gain was based on rising Bitcoin (BTC -1.47%) prices and the announcement that MicroStrategy had deployed another $1 billion in Bitcoin shares. The company now has approximately 90,531 Bitcoins in its treasury, worth roughly $4.4 billion at the cryptocurrency's current price of $49,050 per share. This investment accounts for a large portion of MicroStrategy's total market value of $7 billion, making the stock sensitive to Bitcoin price swings.
Many investors retreated from risky growth stocks today, rotating into cash or lower-priced securities. MicroStrategy was caught in that wave and amplified it as Bitcoin traded sideways today, removing some of the momentum that had been boosting MicroStrategy's stock the day before.
This stock will continue to rise and fall with Bitcoin in the long run, as CEO Michael Saylor has made it clear that he plans to continue making investments in Bitcoin for the long haul. Today, market makers saw more risk than reward in that attitude.