(Bearish) MicroStrategy's Crypto Gambling Addiction & Earnings || Coinbase's BTC Sympathy

With the Market coming into a decline currently, I’m watching two companies and their current situation. Thanks to @LittleBear57 (:bear:LittleBear :bear:#2186) for getting me interested in what’s happening here…

[size=3]MicroStrategy (MSTR)[/size], is as far as the good ole’ wikipedia mentions as a company servicing business intelligence and applications. I’m not too knowledgeable about their current situation in that department, but one thing I am aware of is that they’ve recently were denied by the SEC for their accounting practices. (https://www.cnbc.com/2022/01/21/microstrategy-shares-drop-on-bitcoins-slide-sec-rejection-of-companys-crypto-accounting.html)

They have an estimated 120K BTC that’s averaging around $30,000 and with the likelihood of this correction continuing, it’s also likely the value of BitCoin is going to also be following with it as people are trying to ease loses by getting out until there is a reversal of this downtrend. As of right now, BTC is hovering around 35K. It’s failed to bounce back over the weekend which could hint at more decline as Markets re-open.

Here I’ll post a twitter post relating primarily to MSTR’s situation… https://twitter.com/chrisbloomstran/status/1484970509171318792?s=21

For a TLDR; This lovely man explains the situation well, mentioning how they borrowed 21x their earning before taxes to secure BTC. Their net revenue is around $500M while they decided to play with $2.2B in debt and selling $900M in shares for this transaction. To date, they’ve spent $3.75B in BTC holdings and if BTC decides to break below $30K again, it’s very likely they’ll be in a VERY deep hole if they decide don’t change their strategy before it reaches there.

It’s essentially like when people on WSB were playing with their Student Loans in GME shares, I don’t think this will be a pretty site.

The biggest problem I see with this play is that the spread on the options is ridiculous and the premiums are ludicrous as well. I’ve seen it range to a $600-700 spread which certainly is sore to look at. Getting into this is far riskier if you’re primarily playing this off of sympathy.

As for earnings, it’s coming up for MSTR (Feb 1st) and the way the decline is, I think it may be worth the trying to ride the decline.

It’s likely their EPS and Revenue is continually going to be less & less as far as I can guess. I sadly haven’t much idea what’s behind their product, more on what they’ve invested in so far.

[size=3]Coinbase (COIN)[/size], on the other hand is likely to feel a lot of pain with the rest of the Crypto Miners as one of their main-traded currencies begins to tumble. So far I’ve actually made a decent $$$ on my Put and will continue to watch them with the rest of the Market. Unlike MSTR, their OI and Volume is safe enough to enter without feeling the woes of an incredibly large spread. If you are into the whole bear market sentiment currently, this could be a safer more affordable option.

Disclaimer: I’m not an expert on Crypto, nor am I an expert on the fundamentals of MSTR-- if they have any plans outside of the bad news that was recently released on them. I’m on the impression that these plays will moreso favor bears due to this correction we’re currently in as Crypto is seemingly following the trend the Market is headed.


I would point out a possible catalyst the same time as upcoming earnings - there is a 2 day conference by MSTR: Microstrategy World: Enterprise Analytics. Bitcoin for Corporations. Days are Feb 1 - Feb 2. Often conferences tend to be bullish if good information/news comes out of them.

I agree COIN continues to pull back. It partially mirrors the price action of bitcoin with the added idea that its still a growth company. However, COIN makes a lot more money than people realize. Before riding puts into earnings I would double check what the last 10-Q looked like.

With the recent correction on the Market as well, I wouldn’t be surprised if these two decide to climb back up. At this point I’m waiting to see if these can be potential plays in the future as well. Overall anything put-related made any bear play profitable, which made this DD moot.

As for BTC, it’s likely to keep trending down. Right now it’s likely trying to recover some of the losses from that major drop.

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