Shares of MicroStrategy (MSTR -1.74%), a cloud-based analytics company, were soaring this morning on seemingly no company-specific news. Instead, it appears that investors were reacting to the price of Bitcoin bouncing back above $30,000 today. MicroStrategy has acquired more than 129,000 Bitcoins over the past several years.
The tech stock had spiked by 21% as of 11:45 a.m. ET.
MicroStrategy says that it's the "world's largest publicly traded corporate owner of bitcoin," which was great for shareholders when Bitcoin's price was soaring. But the company's crypto holdings have been a drag on its stock as Bitcoin's price has plummeted over the past several months.
Bitcoin was trading at around $28,500 yesterday afternoon, down from its all-time high of about $69,000 just six months ago. MicroStrategy investors have been watching the price of the digital coin closely because the company said in its first-quarter financial report that it acquired the cryptocurrency at an average cost per Bitcoin of approximately $30,700.
That means that as of just a few days ago, the company's cryptocurrency holdings were underwater. But with the price of Bitcoin spiking above $30,000, the company is getting closer to breaking even with its investment.
MicroStrategy shareholders should likely prepare for more share-price swings. Bitcoin and other cryptocurrencies have been falling recently as investors flee risky investments among growing concerns about rising inflation, Federal Reserve interest rate hikes, and the potential for an economic slowdown.
Even with MicroStrategy's huge gains today, the stock is still down 74% over the past six months. It's going to take a massive Bitcoin price rally for MicroStrategy's share price to erase those losses.