According to a report by investment bank Berenberg, MicroStrategy (MSTR) will change the way it reports Bitcoin holdings following a decision by the Financial Accounting Standards Board (FASB).
Berenberg Says MicroStrategy's Bitcoin Losses Are Misleading
MicroStrategy reported total losses of approximately $2.23 billion, with $917.8 million recorded in Q2 2022, the largest since launching its Bitcoin acquisition strategy in August 2020.
Berenberg argues that this gives the misleading impression that the inherent value of the company has been negatively affected, when in fact this is not the case.
The change will allow MicroStrategy and similar companies with digital assets to eliminate the negative image of impairment losses under existing FASB rules.
FASB's decision allows companies to immediately show gains and losses on their income statements using fair value accounting.
MicroStrategy Chief Executive Michael Saylor welcomed the rule update, stating that it “removes a major barrier to the adoption of Bitcoin as a treasury asset.”
While the FASB stated that the new rules will officially go into effect in 2025, companies will have the option to adopt them sooner. Berenberg predicts MicroStrategy will exercise this option.
Berenberg currently maintains a buy rating on MicroStrategy shares and gives a $510 price target, while the stock traded at $353.07 yesterday.
*This is not investment advice.
