MicroStrategy Stock Sees Uptick Amidst Class-Action Lawsuit Revelations
MicroStrategy (NASDAQ: MSTR) shares experienced an increase, rising by $4.78 (1.20%) from their previous closing value of $399.80 to a new level of $404.58. This stock movement coincided with the company’s announcement regarding a class-action lawsuit filed against them.
MicroStrategy’s Strategic Bitcoin Acquisitions
MicroStrategy has expanded its Bitcoin holdings by acquiring 7,390 BTC, investing approximately $764.9 million at an average price of $103,498 per Bitcoin. This strategic move has resulted in a Bitcoin yield of 16.3% year-to-date in 2025. By May 18, 2025, the company held a total of 576,230 BTC, acquired at an aggregate cost of around $40.18 billion, translating to an average price of $69,726 per Bitcoin.
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Class-Action Lawsuit Unveiled
Investors became aware of the lawsuit primarily through the firm’s disclosure of its latest Bitcoin acquisition. However, Pomerantz, the law firm spearheading the lawsuit, had made the details public on Sunday, May 18.
Shareholders’ Concerns and Allegations
Some shareholders have expressed dissatisfaction with MicroStrategy’s accounting practices, claiming they have incurred losses due to misleading risk statements. The lawsuit alleges that the company provided false or misleading information about the anticipated profitability of its Bitcoin-centric investment strategy and treasury operations. Specifically, the lawsuit claims:
- The profitability projections of the company’s Bitcoin-focused strategy were exaggerated.
- The potential risks related to Bitcoin’s volatility and the possible financial losses due to the adoption of ASU 2023-08 were understated.
- As a result, public statements made by the company were materially false and misleading.
Implications of Accounting Standards Update 2023-08
The lawsuit heavily references the newly implemented ‘Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets.’ This update plays a significant role in the allegations made against the company.
Allegations and Market Impact
According to Pomerantz’s press release, the catalyst for the lawsuit was the disclosure of a $5.91 billion loss on April 7, 2025, which led to an 8.67% drop in MSTR’s stock price. While the exact compensation sought by the plaintiffs remains unspecified, MicroStrategy has publicly declared its intention to contest the lawsuit vigorously.
Why MSTR Investors May Have Overlooked the Lawsuit
Despite the legal challenges, it appears that MSTR investors have not yet fully factored in the implications of the lawsuit. Initially, the stock saw a 2% decline in pre-market trading on Monday, but it quickly recovered, entering a swift rally after the market opened.
Factors Influencing Investor Behavior
This unexpected stock movement occurred despite a backdrop of negative economic news in late May. A significant concern for investors was Moody’s decision to downgrade the U.S. credit rating, which contributed to a surge in the already rising 30-year treasury yield.
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