The Blubber

MicroStrategy Inc., primarily known for its business-analytics software, shifted its focus to discussing bitcoin extensively during its post-earnings call with analysts. The company adopted bitcoin as its primary treasury reserve asset in 2020.

During the prepared remarks session of the post-earnings conference call, the word "bitcoin" was mentioned 150 times, compared to "software," which was mentioned 22 times. The trend continued during the question-and-answer period, with "bitcoin" mentioned 17 more times and "software" mentioned three more times, according to an AlphaSense transcript.

This shift in focus on bitcoin followed the company's report of a wider-than-expected first-quarter loss and revenue that fell below forecasts. MicroStrategy's stock (MSTR) experienced a 14.9% decline in afternoon trading, marking the biggest one-day post-earnings selloff in more than five years, according to available FactSet data. The stock has dropped 35.4% in April, which would be its worst monthly performance since June 2022 when it plunged 37.9%.

In contrast, bitcoin prices (BTCUSD) were down 5.9% toward a two-month low in afternoon trading, and the SPDR S&P Software and Services ETF XSW dropped 1.5%.

The disappointing results were attributed to impairment losses on digital assets, including bitcoin. The company also expects a continued decrease in product-license revenue as customers and prospects transition to the cloud for their AI-driven digital transformations.

Michael Saylor, MicroStrategy's co-founder and executive chairman, highlighted why the company's capitalization on bitcoin is preferable to other assets like bonds, stocks, gold, or silver. He noted that bonds have had a negative return of over 20% since the summer of 2020, resulting in negative real yields that do not cover the cost of capital.

Saylor argued that the "best surrogate" for the cost of capital is the S&P 500 index. However, he believes bitcoin is a superior asset because it is a digital asset in a world undergoing digital transformation. Unlike securities such as stocks and bonds, bitcoin is "an asset without an issuer," making it a global asset.

"[A] security will never be a global asset because [a] security has an issuer, and issuer is a company, and a company has a nexus and a country has an operation," Saylor explained.