MicroStrategy's stock is down 67% for the year. More reports of weak financials in the future may hammer the price down further.

Overview

The American corporation MicroStrategy offers business intelligence (BI), mobile apps, and cloud-based services. The company creates software for mobile app development and for the analysis of both internal and external data to help with business decision-making. Its headquarters is based in Tysons Corner, Virginia.

Financials

Looking at the financials of 2021 against 2020, revenue rose by $30m and gross profit by $29m. The company’s EBITDA came in at $-765m in 2021 versus $-7.5m in 2020, leaving net income at a loss of $-545m for the year. As a result, earnings per share were reported at $-53.44. Total liabilities went up by $1.66bn due to acquiring a high volume of long-term debt, but total assets increased by $2.09bn, which offsets the rise in liabilities. As a result of the above, the company reported its shareholder equity at $978m in 2021, a $425m increase year-on-year.

Technicals

From a technical outlook, its shares are currently trading at $184.22 a share. Towards the upside, resistance sits at $214.16 then at $233.47 then a key level at $272.74. A break above the key resistance could see the stock break out of the descending triangle. Towards the downside, support seems to be established. Support levels sit at $169.00 then at $160.65 then at $152.27. A break below these points may see the share price slide towards the major support point at $144.45. Looking at the indicators, MACD is neutral and RSI is negative as it reads 41.

Summary

On the basis of the financials, even though the company is generating more revenue and gross profit, EBITDA and net income came in at a huge loss. Earnings per share plummeted YoY in 2021. The assets do outweigh the liabilities but if the company continues reporting losses that will only diminish over time. Based on the technicals, support seems established and a bounce higher could emerge as MACD is neutral and RSI heading towards a neutral stance. However, the stock is down 67% for the year and a continuation of poor results may not provide the boost it needs to break out of the descending triangle. A short-term bounce may appear but theoretically, more negative reports will hammer the price down further.