Shares in MicroStrategy (MSTR) began trading for just $131 at Thursday’s open – down 89.4% from its price at the prior day’s close.

The price change isn’t due to a market crash or mass selloff but is instead the result of a previously announced “stock split” that has now taken permanent effect.

The MicroStrategy Stock Split

A stock split is when a company increases its number of outstanding shares by issuing new shares to all current shareholders in exact proportion to their current holdings.

Last month, MicroStrategy announced that MSTR shares would undergo a 10-for-1 stock split after trading ended on August 7, with investors receiving an additional nine shares for every one share held as of August 1.

With such an influx of new supply, individual share prices naturally cratered once trading began on a split-adjusted basis on Thursday. However, each investor’s stake in the company ultimately remains the same, while the “barrier to entry” to gain exposure to MicroStrategy has been significantly lowered.

“A stock split is designed to make the stock price more affordable to new investors,” wrote Bitcoin educator Rebecca Goodwill to Twitter on Thursday. She continued:

“Whilst a stock split wont make you rich overnight, it’s a sign that the company has outperformed the market, the stock price needs a reset [and] the company is gearing up for its next growth phase.”

MicroStrategy (MSTR) Price. Source: TradingView

MicroStrategy’s Bitcoin Holdings

One day before the split, MSTR shares traded for $1,246 apiece. Earlier this year, the price reached a two-decade high of $1,919, spurred by the rising price of Bitcoin following the launch of U.S. Bitcoin ETFs on January 11.

MicroStrategy today holds 226,500 BTC on its balance sheet worth $13.12 billion at currency prices. Meanwhile, the market cap of the company is $25.4 billion per Yahoo Finance – roughly double that figure.

The company has acquired its Bitcoin stash by leveraging capital markets, including by issuing new shares of stock and selling cheap debt.

Before the company announced its first Bitcoin purchase in August 2020, its stock traded for $123 per share – roughly the same price as today, but before any form of stock split.

Other companies like Semler Scientific and MetaPlanet have since adopted MIcroStrategy’s playbook by making Bitcoin the core of their corporate balance sheets. Unlike MicroStrategy, MetaPlanet recently conducted a 1-for-10 reverse stock split, boosting the price of its shares 10X.