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

[fillippone]

Since not a single accuser has been able to provide conclusive evidence, I think such statements were thrown into the media in order to further provoke a dump. These statements began to appear just in those days when Bitcoin began to fall from $42,000. Of course, there were those who tried to connect this dump with Microstrategy sales.

There might be a variety of reasons why someone threw those accusations. And as Bitcoin is an unregulated market, for sure we have to be very attentive to the pieces of information we get in the wild. We always need to double-check and ponder over those messages, before taking action.
It's a Wild West over there, and everyone wants to separate us from our money satoshi

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[Zlantann]

Here is another interesting event related to MicroStrategy. They decided to become the first public company to use the Fidelity Investments service. Those, in turn, offer retirement savings in bitcoin.

There was also a short CNBC interview on this subject, where Michael Saylor speaks warmly about bitcoin, calling it an ideal asset for retirement savings:

Michael Saylor is extraordinary, he is one of the leading voices in the support of Bitcoin. His innovation and creativity is giving Bitcoin a multidimensional identity. We have seen Bitcoin in the mortgage sector but introducing it to the pension industry is outstanding. His definition of Bitcoin is mind blowing. He defined it as " "A bank in cyberspace, run by incorruptible software, offering a global, affordable, simple, & secure savings account to billions of people that don’t have the option or desire to run their own hedge fund."


https://www.michael.com/en/bitcoin

[fillippone]

This evening Microstrategy is going to report its earnings:



We will closely follow their statements, but there is one figure I am willing to take correct: Q122 impairment losses.7
 


I even expect a little bit of discussion about these figures, as Micheal Saylor has been quite a vocal critic for these.

[JayJuanGee]

This evening Microstrategy is going to report its earnings:



We will closely follow their statements, but there is one figure I am willing to take correct: Q122 impairment losses.7
 


I even expect a little bit of discussion about these figures, as Micheal Saylor has been quite a vocal critic for these.

Holy shit.

We already likely realize the frustration levels that a lot of companies have with the ways that they are required to calculate the value of assets that they hold, and I would imagine that MSTR is having attorneys go over the various ways that they feel comfortable talking about these kinds of valuations... so I would imagine that if Saylor (or whoever is going to be presenting the information) were to end up being sloppy in the way that they present the matters, then they could well be getting into trouble with the SEC for attributing higher valuations than they are allowed... For sure there are ways to put in the proper disclaimers, and still say what you want to say, yet I would imagine without the counsel of attorneys, there are ways to fuck up those kinds of disclaimer statements.. .

Saylor seems quite capable of NOT fucking up such statements and likely putting in the proper disclaimers and context while at the same time outlining that they are forced to valuate in the bitcoin assets in kinds of ways so that the audience (which is the whole public when you have a public company) will sufficiently understand what he is saying... at least the sophisticated ones will understand..

The rule is so confusing that it is quite likely that non-sophisticated members of the public do not understand and still will not understand even if Saylor were to repeat it 100 times or they replay the tape that many times... hahahahahaha  Don't get me wrong, I am not calling the public dummies, but the way that companies are forced to mark the value of assets like bitcoin remains stupidly ridiculous and perhaps purposefully confusing to try to cause companies to sell and rebuy assets like bitcoin when they should just be HODLing..   We know that MSTR does have a policy/practice to just buy and HODL and for sure they are punished for such practice in the way that they are forced to make their valuations.

[fillippone]

How comes I didn't Post it yesterday? I found this in my drafts! Thanks to @Ratimov making me realize I didn't press the correct button!
Close enough!

MicroStrategy says it may explore more 'yield generation opportunities' following bitcoin-backed loan deal

MicroStrategy said. "Digital asset impairment charges of $170.1 million and $194.1 million for the first quarter of 2022 and 2021, respectively, were reflected in these amounts."

Still some fine tuning to do:

Link to the full presentation:

[fillippone]

Micheal Saylor reassures us that Microstrategy is not going to run in a margin call anytime soon.



Replenish collateral, yes. Forced sell, no.

[m2017]

Micheal Saylor reassures us that Microstrategy is not going to run in a margin call anytime soon.



Replenish collateral, yes. Forced sell, no.

Does anyone still believe in such public statements? When it comes to company interests, will they tweet their true intentions? I don't undertake to judge Saylor's statement, whether it is true or not, but my personal attitude to such statements sounds like "I doubt it" and "I don't take it on faith in any way". I think in the near future we will find out the truth about the Microstrategy's plans for their actions.

[fillippone]

Does anyone still believe in such public statements?

What I read in this statement is purely the fact that Microstrategy has enough bitcoin not to be forced to sell any until a very low price.

This is to dismiss any FUD about their supposedly near level of “long liquidation”.
Of course this is the mechanics of the loan under the assumption they are never going to sell. But this is something we can discuss for ages without adding anything to the reality.

[salad daging]

Does anyone still believe in such public statements?

What I read in this statement is purely the fact that Microstrategy has enough bitcoin not to be forced to sell any until a very low price.

This is to dismiss any FUD about their supposedly near level of “long liquidation”.
Of course this is the mechanics of the loan under the assumption they are never going to sell. But this is something we can discuss for ages without adding anything to the reality.

It's quite difficult to see the strategy they are implementing now because it could be a ticking time bomb too if what you say about them has a lot of bitcoins there. because of course this would be a double-edged sword now.

for now it's good to see them here and still continuing to believe in bitcoin but on the other hand it's also a bit risky when they have a lot of assets in bitcoin and sell at the target they set then this will also have a bit of an impact

[STT]

The company is selling shares of no fixed value, they are not obligated to sell any BTC if they dont want to (if they used leverage too much then I get Im wrong but overall I hope this isnt true).   If anything it would be prudent to trade the edges of any position for liquidity and cashflow, every asset has some holding cost but with rates so low I doubt they have much pressure if fairly sensible.   If they were a trust like GBTC then they'd be selling by requirement I guess as they must repay holders in line with  the price etc.
   I'd be more bullish on this operation if they had some good plans to use the majority of their BTC in some way, not heard of that.   People > companies is how I rate BTC prospects because companies employ leverage where as a person just wants utility at an ok price and will come back for it.  Just holding any commodity is not a key to fortunes, its normal for any market to test its boundaries and even half at times as price variance is large in commodity markets.   Thats how I view BTC roughly, a global security related commodity as obviously all modern FIAT currencies are horribly corrupted by national politics.

soft margin call on a loan

That reads badly, reminds me of the details read out during 'The big short' movie or just various details from that time.    Markets can be really mean at times, the daily, weekly even monthly pricing can be sharply wrong but it wont matter if someone got your signature on a bet you cant stand behind.

[arallmuus]

Of course this is the mechanics of the loan under the assumption they are never going to sell.

Yeah under the assumption that they are never going to sell because Saylor has a 'plan' for it but that falls off under the category that if bitcoin isnt tanking. Kinda love his enthusiasm to dismiss all those FUD because if somehow if they are forced to sell those bitcoin, it would be major bloodbath probably the worst that we will ever see in crypto space history

[Ryu_Ar1]

Does anyone still believe in such public statements?

What I read in this statement is purely the fact that Microstrategy has enough bitcoin not to be forced to sell any until a very low price.

This is to dismiss any FUD about their supposedly near level of “long liquidation”.
Of course this is the mechanics of the loan under the assumption they are never going to sell. But this is something we can discuss for ages without adding anything to the reality.

in this context it's really good to see a brand in buying bitcoin no matter the FUD and the price is still going down is very good and I really like seeing things like this especially when it comes to bitcoin.

but on the other hand we also can't rule out the fact that they can buy at a price like this then automatically they can also sell at the price they want and which they set beforehand.

they could be something good for now and when they suddenly sell they could be the mastermind of FUD in the future

[fillippone]

According to my Computations, MSRT is trading at a substantial discount compared to bitcoin Market Value:



Bitcoin bought by Microstrategy now accounts for the 195% of the total Market Capitalization.
Buying Microstrategy shares equals buying bitcoins at 14,691 USD!

[fr4nkthetank]

Interesting.  Perhaps there is a risk of over leverage and collapse if bitcoin goes sub 20
would be interesting to watch nevertheless

[STT]

Michael Saylor said on Twitter he can cover loans down to a BTC price of 3000 dollars or so which is a proper melt down; saw it reported on CNBC.  I thought I was being specially negative just throwing out the 2019 high as a sharp harsh figure.   At present BTC is quite close to the 200 week average which generally has marked the extremities to the volatile pricing which is BTC.
   Never say never but would be nice if MSTR was that much of a bargain.   Market cap is shares and I dont know the figures but enterprise value would include the wider valuation amount for a company https://www.investopedia.com/terms/e/enterprisevalue.asp  I should look on Seeking Alpha if anyone looked at this.

Short Interest
23.19%

Thats pretty big, people are using this share to bet or hedge I think

[bitgov]

Third Buy:

Did they sell off there btc when price was All Time High in Nov 2021 i.e. 68k$? They have made a good move by investing in bitcoin at 19k$. Even if they have it today they can sell and get profit. I m new to this thread so won't have idea if they still have it or sold.

[The Sceptical Chymist]

When it comes to company interests, will they tweet their true intentions?

If you're talking about the CEO of a publicly-traded company, they'd better be making important tweets that happen to be true as well (lol).  Otherwise, they'd be in deep, deep shit with the SEC and God knows what other alphabet agency they're regulated by, and that's not even taking into consideration potential shareholder lawsuits.  So while I don't think people like Saylor would like to be held to such a standard, I'm fairly sure most of them know the consequences if they give out false or misleading information about their company.  That's a huge no-no in the corporate world.

And no, knowledge and fear of consequences doesn't prevent some of these douchebags from tweeting some wild stuff, but you better believe the company is going to get sued if shareholders (or ambitious lawyers) even think the stock price was adversely affected by said wild tweeting.

Now, I'd been curious the past couple of days about what MSTR's situation is with BTC tanking.  After reading some of the posts here and on some other thread I came across, it doesn't appear to be as bad as I thought it might have been.  I'm keeping fingers and toes crossed that the markets make a recovery, because it seems like everything is down as of late.

[fillippone]

Now, I'd been curious the past couple of days about what MSTR's situation is with BTC tanking.  After reading some of the posts here and on some other thread I came across, it doesn't appear to be as bad as I thought it might have been.  I'm keeping fingers and toes crossed that the markets make a recovery, because it seems like everything is down as of late.

Well. Actually, it's not so good for Microstrategy.
Next quarter they are going to report at least 315 million digital assets impairment loss.



This is with the current low price level on Coinbase. If they managed to trade bitcoin at a lower level or bitcoin will dump again, the loss will raise more than this.
If bitcoin rallies to 100K, still they won't be able to inflate their holding value until they sell.

[fr4nkthetank]

does microstrategy have debentures/bonds/notes that have an option to convert into shares built in ?  if so i'd read the prospectus about that, might explain the discount on the shares if there is possibility of massive share dilution

[JayJuanGee]

Third Buy:

Did they sell off there btc when price was All Time High in Nov 2021 i.e. 68k$? They have made a good move by investing in bitcoin at 19k$. Even if they have it today they can sell and get profit. I m new to this thread so won't have idea if they still have it or sold.

MSTR has engaged in a fairly aggressive bitcoin accumulation strategy that has been suggested to rise to the level of a speculative attack on the dollar (at least some people have described MSTR's approach to bitcoin in that kind of a way - which is not completely unfair, even if that characterization might come off as overly-confrontational regarding what MSTR might be doing).

In other words, their first couple of BTC purchases (before the 3rd one in the $19ks) had been right around $10k, and from the start they used decently large portions of their cash reserves initially and then their cashflow subsequently.

Furthermore, they have created investment bonds, encumbered some of their business equity, gotten loans for the purpose of buying BTC, and increasingly put themselves into both debt and also various ways of leveraging long..

Yeah, sure they could shave of some of their BTC and still be in profits on those BTC that they sell, yet if you had not noticed the ideology of MSTR - including but not limited to their leader (Saylor) is not getting caught up in short-to-medium term valuations of BTC in terms of dollars, but instead a kind of longer term play that continues to acquire the asset as if it were the scarce real estate analogy that Saylor employs when talking about bitcoin.

You likely realize that Saylor is far from secret about his views, and essentially has been suggesting that his (and MSTR's) style of aggressiveness should be replicated by others - and he has been pretty damned vocal since around the same time as his Company's first BTC purchase in August 2020 (that spurred fillippone into making this thread too).

Selling for short-term good feelings does not conform with his way of approaching bitcoin as an asset, and surely I have criticized Saylor on a number of occasions for being way more bullish than I would recommend - and especially such an approach would not be as applicable for the vast majority of normies, yet I would not consider that Saylor has even gotten close to putting himself in a pickle - yet even if the public and some of his shareholders likely get nervous about outrageous negative BTC price performance.. that happens sometimes, and maybe has been happening a bit more at this particular stage of bitcoin's market growth than what had been expected.

Another matter is that Saylor (and MSTR) made quite a few BTC purchases (levered as well) in ways that did not appear to have any level of sensitivity to BTC prices, so even though several of his earlier purchases that were employed without leverage and also with excess cash that was available are well into the green, several of his later purchases were made at much higher prices and with leverage - and sure in retrospect, we might consider that he might have been a bit better off to have attempted to strategize buying on the dip a wee bit more, but just Saylor's overall approach and bullish mindset in regards to bitcoin has not allowed him to be price sensitive in any kind of mere mortal way or even in the ways that normies should probably be a bit more price sensitive than Saylor has demonstrated.

Don't get me wrong, I consider Saylor to be smart as fuck in a lot of ways in regards to creating and employing innovative financial instruments to accumulate more BTC, while I have been having my doubts about whether Saylor might have learned any lessons in terms of better approaches to accumulate BTC - or if his (and MSTR's) current seemingly somewhat stressed financial position might not cause him to adapt some of his seemingly gambling (in the sense of overly leveraging) ways.  I am not even patronizing because I am pretty sure that Saylor had already recognize some aspects of these kinds of risks that the BTC price might go down rather than up or sideways, but still there could be some ways that Saylor might either recalculate getting into further buys (such as employing a somewhat HODLer short-term strategy) or just being a bit more strategic on some of his buys in terms of attempting to buy on dips with some of the potential shorter term BTC purchases that he might make.      

Guys can speculate in regards to how selling might be one of the additional tools that Saylor (MSTR) could employ because there seems to be some kind of fantasy about selling BTC to be part of the Saylor (MSTR)'s portfolio management, and it just seems doubtful to me that selling would be any kind of significant or meaningful way of managing MSTR's portfolio.. at least not at these prices.. but maybe if the BTC price goes back up into the $50ks or higher maybe Saylor might consider some kind of selling to be prudent - yet based on pretty strongly held and seemingly consistent statements that Saylor has made, I have my doubts in that regards to him even considering selling BTC in the $100k or $1million price ranges.. and sure, maybe I am misreading him a wee bit in terms of his ideas in regards to the employment of some selling to be healthy for his overall portfolio..