MicroStrategy has established itself as the largest corporate holder of Bitcoin, amassing 226,500 Bitcoin since 2020, which has had a significant impact on its stock price.

The appreciation of Bitcoin's value has primarily driven MicroStrategy's stock growth, overshadowing its core business in business intelligence software.

As part of this transition, MicroStrategy is shifting its software business to a subscription-based cloud model, which is expected to create predictable recurring revenue.

Since it began investing in Bitcoin, MicroStrategy's stock price has skyrocketed by 1,200%, significantly outperforming the S&P 500 and Nvidia.

In August, the company executed a 10-for-1 forward stock split following a remarkable share price increase of over 100% in 2024.

CEO Phong Le has indicated that transitioning to a software-as-a-service model may lead to short-term revenue declines, but he anticipates long-term growth.

Despite the rising stock price, the company reported a decline in revenue, with sales dropping to $226.7 million in the first half of 2024, down from $242.3 million the previous year.

However, the company did see a 21% increase in subscription income, reaching $24.1 million in Q2, compared to $19.9 million the previous year.

As of the second quarter, MicroStrategy's total liabilities stood at $4.2 billion, with $3.8 billion in debt and a debt ratio that increased from 46% in 2023 to 55%.

The company's strategy involves utilizing cash from its software business, incurring debt, and issuing stock to finance its Bitcoin purchases, leading to substantial liabilities.

Investors are advised to approach MicroStrategy stock with caution, particularly until the company demonstrates growth in its core software business and improves its balance sheet.

Despite these challenges, Wall Street analysts maintain a 'buy' rating for MicroStrategy, with a median share-price target of $194, even as the company reported a net loss of $102.6 million at the end of Q2.