MicroStrategy Executives Sold Stock After Bitcoin’s Swoon

(Bloomberg) -- Perhaps some MicroStrategy Inc. insiders aren't quite as sure about tying the company's long-term fortunes to Bitcoin as their Chief Executive Michael Saylor. 

As Bitcoin was recovering from its summer swoon, two of Saylor's top lieutenants -- Chief Financial Officer Le Phong and Chief Technology Officer Timothy Lang unloaded stock in August after exercising about 30% of the options they were awarded. Each realized cool gains of around $7 million from the sales. Saylor, one of the digital currency's most vocal proselytizers, hasn't sold any shares, SEC filings show.

While converting options is not unusual for executives, whose grants are considered part of their compensation, the sales follow Saylor's decision to add more than $2 billion of Bitcoin to the enterprise software maker's balance sheet and making the purchases an official corporate strategy. 

MicroStrategy representatives didn't reply to requests for comment on last month's transactions. 

After dropping below $30,000 in late July, the digital asset appeared to be poised to make another run at its all-time high of about $65,000 before being beset with more volatility this week. 

Shares in the company have surged almost fivefold in the past year, mirroring the gains in Bitcoin, as many investors effectively bought the shares to gain exposure to the largest cryptocurrency at a discount.  

Insider selling is common in the aftermath of quarterly earnings reports. But some on Wall Street, such as Matt Maley, chief market strategist at Miller Tabak + Co., raised questions on whether the maneuver indicated company officials are concerned that Saylor is taking his eye off the ball when it comes to the core business.

“Senior executives do not sell stock if they think it's going higher,” said Maley. “It's just a bad sign no matter how you slice it.”

Lang exercised 10,000 of awarded options on Aug. 26 and subsequently sold all the converted shares, receiving approximately $7.10 million. Phong exercised 20,000 options Aug. 2 through Aug. 6, sold all the shares and received a little over $7.30 million. Both retain about 20,000 options.

In 2020, the company's compensation committee didn't grant stock option awards to executive officers holding outstanding options that had been given in prior years. Saylor received the option to purchase 400,000 shares in 2014.

Many publicly traded companies establish trading plans for the selling of stock. MicroStrategy's Form-4 and Form-144 filing to the Securities and Exchange Commission didn't note the sales were pre-arranged or pursuant to a plan.

Ed Moya, senior market analyst at Oanda Corp., said he doesn't see the insider selling as something that will faze long-term cryptocurrency bulls.

“MicroStrategy's Saylor relentless support for Bitcoin has made the company a cryptocurrency trade and not necessarily a bet on the company's software solutions and services,” said Moya. “The share price will likely continue to go the direction of Saylor and his bet on Bitcoin.”

Shares of MicroStategy dropped 1.5% to $638.62 as of 4:30 p.m. in New York, while Bitcoin fell 1.7% to $46,024. 

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