MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

[fillippone]

The PE ratio of Microsoft is 40x. NVIDIA 75x. Thinking you pay $150k for a bitcoin buying MSTR is a too simplistic view, is what the market currently tells us. Let's see.

Funny you mentioned P/E, as this ratio for MSTR is plain absurd.
I am not a fan of MSTR as an investment, and I have been consistently wrong in the last year or so. I know others share my opinion and are now underwater. I guess the time is going to tell us, who’s wrong, provided that being right in the long term is a useful, if you had to earlier close your position!

[bitebits]

[...]
- Additionally they are world's first publicly traded bitcoin development company who's products might become highly valuable going forward.
[...]

In case anyone is interested in this part, a short pitch from Saylor himself:

https://www.youtube.com/embed/A60jVnAIX40?start=2735&end=2848

[fillippone]

The interesting part is Metaplanet.
They are trying to follow the steps in MicroStrategy steps.
They now hold 141 BTC, those are pocket money for Micheal Saylor, but we will see.

[Wind_FURY]

The interesting part is Metaplanet.
They are trying to follow the steps in MicroStrategy steps.
They now hold 141 BTC, those are pocket money for Micheal Saylor, but we will see.

There will be more coming in my opinion. Because once those different institutions - government, financial, corporate, probably even religious too, will start to understand what Chad Saylor started and all the value that will be accrued from his "Bitcoin Gamble", then would they want that for themselves? Wouldn't they want to weaken their enemies' political strongholds? The only actual choice is to "play the game" - HODL Bitcoin.

[fillippone]

Microstrategy announced a stock split of 1 to 10.
So now, each share will be roughly 135 USD. This wouldn't help the stock price at all, apart from an illusion of more trading volume.
Also, anyone who wants to be short can do so with less capital!

These kinds of things are quite irrelevant from a technical and analytical point of view, yet there is positive alpha in being long stocks that are going to be split!

[bitebits]

These kinds of things are quite irrelevant from a technical and analytical point of view, yet there is positive alpha in being long stocks that are going to be split!

It reduces the cost writing calls and puts by 10x. It requires a minimum of 100 shares to sell covered calls.

[fillippone]

These kinds of things are quite irrelevant from a technical and analytical point of view, yet there is positive alpha in being long stocks that are going to be split!

It reduces the cost writing calls and puts by 10x. It requires a minimum of 100 shares to sell covered calls.

I wasn’t aware of this.
But are you sure that the minimum number of options is not related to the stock price? I would guess you cannot write options on a smaller notional only because of a stock split.
But I might be wrong.

[JayJuanGee]

These kinds of things are quite irrelevant from a technical and analytical point of view, yet there is positive alpha in being long stocks that are going to be split!

It reduces the cost writing calls and puts by 10x. It requires a minimum of 100 shares to sell covered calls.

I wasn’t aware of this.
But are you sure that the minimum number of options is not related to the stock price? I would guess you cannot write options on a smaller notional only because of a stock split.
But I might be wrong.

I am confused too (I not proclaiming that you are necessarily confused in the exactly same kinds of ways that I am, fillippone.. but I am just speaking in a "me too" kind of way).  

More specifically, I am not really into some of these kinds of stock trading matters, since I don't really fuck around with trading stocks... or using various financial instruments related to stock trading (or stock investing).. probably, I am more of an index fund kind of guy when it comes to stocks.. and so any of my specific kinds of investing and/or trades relate to bitcoin rather than stocks.. and we likely realize that bitcoin is not the same as stocks, but surely there are more and more financial instruments being created and utilized related to bitcoin in order to sometimes create some ambiguity in regards to the extent to which the bitocin might be owned directly or not and whether or not the bitcoin can be withdrawn from a third party's platform if there is a representation of ownership of the bitcoin..

In any event, I need some more explanation regarding the supposed differences of something like a stock split versus not doing the stock split.. and it seems that I had largely presumed something similar as what you (fillippone) had already written that the stock split was more of a perception of cost matter, and that the stock split had no other significant and/or material change in meaning or value beyond creating a different perception of "unit value" by reducing the number of units.. so in this case creating 10 shares for every previously owned share (of 1).

[fillippone]

From a perfectly rational point of view, there are no differences before and after a stock split.
Instead of having 1 stock at 1000 you have 10 at 10.
There is only a perception of lower valure of the stock itself. So more buyers might be interested.

There are companies that never did a stock split (Berkshire Hataway). The reason is simple: they don't want as a holder someone that believes you can create value for the enterprise with a simple mathematical operations.

[bitebits]

Berkshire has B shares for that very reason (which are a lot more liquid than the A shares). There are as well exchanges out there that don't allow buying fractions of shares making it harder for the little guy to own some. Saylor expects bitcoin to do at least a 10x from today, which makes the shares even more out of reach when not split. Together with the option trading argument I think spitting the stock makes perfect sense.

Maybe we learn some more during next announced financial results for Q2 (Thursday, August 1st, 5-6pm ET):
https://microstrategy.zoom.us/webinar/register/WN_4PO93A4dRuimg1b-4bRcUQ



Edit: https://seekingalpha.com/article/4704081-microstrategy-stock-split-upside-is-potentially-enormous

[bitebits]

MSTR is the corporate triple maxi strategy.
https://www.youtube.com/embed/O9KnBcWMkpw?start=1280&end=1630

[bitebits]

https://finbold.com/george-soros-just-updated-his-stock-portfolio/

Perhaps the most interesting among the top stocks owned through the first quarter of 2024 is the shares of MicroStrategy (NASDAQ: MSTR), valued at approximately $135 million.