What Happened?
Shares of bitcoin development company Strategy (NASDAQ: MSTR) jumped 4.5% in the afternoon session after the U.S. Treasury Department and IRS indicated the company may avoid the 15% U.S. corporate alternative minimum tax on its substantial unrealized cryptocurrency gains. The interim rule clarifies that companies can exclude unrealized gains and losses on digital assets, such as Bitcoin, when calculating their tax liability. This development is particularly significant for Strategy, the world's largest corporate Bitcoin holder, as it has previously flagged the risk of a multi-billion-dollar tax bill on its more than $27 billion in unrealized profits. The favorable guidance removes this major financial uncertainty for the company. The stock's rise also occurred as the price of Bitcoin surged, lifting other cryptocurrency-linked equities.
The shares closed the day at $338.47, up 5.1% from previous close.
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What Is The Market Telling Us
Strategy’s shares are extremely volatile and have had 72 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 5.5% on the news that the price of Bitcoin climbed and the company announced it had purchased an additional 196 bitcoins. As the largest corporate holder of Bitcoin, MicroStrategy's stock performance is closely linked to the cryptocurrency's value. The company disclosed it acquired the additional tokens for $22.1 million over the past week, at an average price of $113,048 per coin. This latest purchase brings MicroStrategy's total holdings to 640,031 bitcoins. The news came as Bitcoin itself saw a price increase of over 1.5%, further boosting investor sentiment in companies with significant crypto exposure.
Strategy is up 12.7% since the beginning of the year, but at $338.05 per share, it is still trading 28.7% below its 52-week high of $473.83 from November 2024. Investors who bought $1,000 worth of Strategy’s shares 5 years ago would now be looking at an investment worth $22,694.
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