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Jim Cramer Issues Warning About MicroStrategy

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Tue, 14/05/2024 - 5:54
Jim Cramer Issues Warning About MicroStrategy
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Famous CNBC host Jim Cramer recently took aim at business intelligence MicroStrategy.

The 69-year-old “Mad Money” host recently warned his audiences against buying the company’s stock. 

Those who want to get exposure to Bitcoin should purchase the largest cryptocurrency directly, according to Cramer. 

The bull case 

MicroStrategy has substantially outperformed Bitcoin on a year-to-date basis. 

According to investment banking company TD Cowen, the stock could experience a significant surge this year. 

Institutions dipping their toes into Bitcoin ETFs could prove to be a major bullish catalyst for MicroStrategy, according to TD Cowen. 

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The company has also been predicted to benefit from the widely expected rejection of Ethereum-based spot ETFs later this month.

Saylor has predicted that Bitcoin ETFs would not pose a threat to MicroStrategy since ETFs charge fees. At the same time, MicroStrategy provides holders with “intelligent leverage” without charging a fee. 

MicroStrategy’s Q1 results 

Last month, the company reported a quarterly net loss of $53.1 million. The Bitcoin-related paper gains recorded by MicroStrategy in Q1 were not reflected in the recent report since the firm is yet to opt for the new accounting rule. 

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Last month, broker Benchmark said that the company could be included in the S&P 500 index if it were to adopt the new accounting standard.

Last year, the Financial Accounting Standards Board (FASB) allowed companies to report digital currencies on their balance sheets at fair value starting from 2025. However, the new accounting rules could be adopted earlier. 

A wild ride 

MicroStrategy is riding high because of the Bitcoin bull run. This comes after the company seemingly came on the verge of receiving a margin call in 2022 when the cryptocurrency saw a massive plunge. Cramer taunted Saylor back then on social media: 

“The pressure on Microstrategy's stock because of all the borrowing it did against crypto is a little too "obvious." It is hard to imagine they don't have something up their sleeves to prevent this margin call from being triggered? Tell us,” he said. 

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