MicroStrategy Pivots to Bitcoin But Declining Software Revenue and Insider Sales Raise Concerns

MicroStrategy is shifting its business model from software licensing to subscription cloud services, including launching a new BI/AI chatbot tool. However, revenue has been declining for the past decade.

The company has been cutting headcount and costs while aggressively acquiring bitcoin to hold on its balance sheet, now totaling 190,000. Bitcoin holdings are shielded in a separate entity.

With declining software revenue, the company's valuation depends heavily on its bitcoin holdings. This adds operational risks relative to simply holding bitcoin directly.

Insiders, including CEO Michael Saylor, have been selling stock despite this strategy aiming to accumulate more bitcoin. This seems counterintuitive.

With bitcoin spot ETFs now available, the operational risks of MicroStrategy make its shares overvalued trading at almost 2x its bitcoin holdings. Shares could fall 50% to trade in line with bitcoin value.