Better Stock Split Stocks: Sony and MicroStrategy

There are many companies that implement this forward stock split In 2024. Among them is the electronics giant Sony Group (SONY 1.43%) and software company MicroStrategy (MSTR 2.61%)Sony’s 5-for-1 stock split was scheduled to occur on October 1, while MicroStrategy’s 1-for-10 split was completed in August.

Both companies fall into the tech stock camp, but Sony and MicroStrategy have moved away from their electronics and data analytics roots, respectively. Sony is focused on entertainment today, while MicroStrategy describes itself as the “largest institutional shareholder.” Bitcoin “In the world.”

These factors contribute to why each company is an interesting stock split investment. These factors also make it difficult to evaluate which one to invest in, and it takes some research to uncover the pros and cons of each company. Here is a breakdown of these veteran tech companies to help you decide which one is a better investment.

Unpacking Sony

Although Sony began as an electronics company in 1946, its video games, movies, and music divisions are now the dominant source of sales. These segments were projected to account for about 60% of its revenue in 2023 fiscal year, Expired March 31, 2024.

The conglomerate has strong entertainment businesses. In addition to Sony’s PlayStation video game console, sales of which outstrip those of its competitors Microsoft‘s Xbox became the world’s largest music publisher when the company acquired EMI in 2018. The company became the first major studio to own a movie-theater chain in 75 years when it acquired Alamo Drafthouse Cinema in June.

Sony’s strategy is to combine its technology know-how with its entertainment businesses to create competitive differentiation. For example, its gaming software was used to create the Torchlight tool, which allows filmmakers to better plan film shoots using virtual environments.

The upcoming stock split will push down the price of each share, so it may seem like a good time to buy — but there’s a catch to investing in Sony. The company is planning a partial spinoff of its financial services division in 2025.

As part of this, shareholders will receive stock in the new company in exchange for Sony shares.This article (Provides a more in-depth analysis of the subsidiary to help you evaluate whether you want to own stock in the new company.)

As for Sony’s entertainment focus, the strategy is working. In its fiscal first quarter ended June 30, the company’s revenue rose 12% from a year earlier to 2.6 trillion yen when its financial services segment was excluded, compared with growth of just 2% when all divisions were included.

Evaluating MicroStrategy

MicroStrategy began in 1989 as a software company that helped clients gain business insights from their data. In 2020, the company began investing cash from its operations into Bitcoin.

Since then, MicroStrategy has accumulated 226,500 Bitcoin as of July 31. It owns such a large amount of the cryptocurrency that its stock now closely mirrors the price of Bitcoin.

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At this point, investing in MicroStrategy is as much about the value of its digital currency as it is about its software operations. In fact, the company’s management suggests that it is an investment option. spot bitcoin exchange-traded fund (ETF) is a platform for investors looking to invest in cryptocurrencies, as it can use the money it makes from its software business to fund Bitcoin purchases.

The management team has a good case. From the start of its 2020 investment in Bitcoin through the end of this July, MicroStrategy stock has risen more than 1,200%.

But MicroStrategy isn’t just using cash from operations to fund its Bitcoin purchases. It’s also taking on debt as another source of funding. Its Q2 liabilities of $4.2 billion include $3.8 billion in debt, up from $2.2 billion in debt the year before.

Whether MicroStrategy can sustain this Bitcoin buying strategy long-term is debatable, as revenue growth has stalled. The company’s software business saw annualized sales decline to $111.4 million in Q2, down from $120.4 million in 2023. This is the third consecutive quarter of annualized revenue declines.

Choosing between Sony and MicroStrategy

Unless you are looking for a way to invest in Bitcoin, Sony is better long term investment Choosing between these two tech companies is carving out a niche in the entertainment industry by leveraging electronics expertise to deliver consumer experiences.

Meanwhile, MicroStrategy’s focus on Bitcoin has boosted its stock, but the company’s rising debt and declining revenue mean it’s risky to invest in its stock for the long term.

The only problem with the Sony investment is evaluating whether you want to own stock in the financial services subsidiary. Some details of the subsidiary are not yet known, such as how many Sony shares will be exchanged for stock in the new company.

There’s no need to rush into buying Sony, as a stock split doesn’t change the overall market value of your investment. It’s wise to wait for more subsidiary details to be announced before deciding whether to buy stock.