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 splitting 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.

[LFC_Bitcoin]

@saylor
In July, @MicroStrategy acquired an additional 169 BTC for $11.4 million and now holds 226,500 BTC. Please join us at 5pm ET as we discuss our Q2 2024 financial results, the outlook for $BTC, and our #Bitcoin development strategy. $MSTR

https://t.co/cfGPc42jfM
https://x.com/saylor/status/1819102944744161537

[JayJuanGee]

@saylor
In July, @MicroStrategy acquired an additional 169 BTC for $11.4 million and now holds 226,500 BTC. Please join us at 5pm ET as we discuss our Q2 2024 financial results, the outlook for $BTC, and our #Bitcoin development strategy. $MSTR
[img width =222]https://talkimg.com/images/2024/08/01/5QdhJ.jpeg[/img]
https://t.co/cfGPc42jfM
https://x.com/saylor/status/1819102944744161537

Isn't it a bit ironic how some longer term guys here might look at the acquisitions of MSTR and then consider that MSTR is acquiring in the ballpark of the total of an OG Bitcoin's stash in a month (and that was a relatively small month for MSTR), or maybe MSTR's monthly acquisition is in the ballpark of 2x of an OG bitcoiner's stash..

And at the same time, there is some likely appreciation that perhaps after this next bull run, MSTR might be describing the acquiring of less than 50 BTC in a month and proclaiming that purchase to have had been a decently large monthly acquisition...

Even if 50 BTC might not be $50 million soon in the future, it may well be $10 to $20 million within this cycle or perhaps within the next cycle.. but surely better to keep your value in bitcoin rather than in dollars (or trying to trade in and out of BTC with any kind of great expectation to be able to buy back BTC cheaper - even though surely sometimes the sales on the way up might end up working out to be able to buy back more BTC at lower prices.  

I frequently suggest that it surely is not even close to guaranteed to be able to buy back Bitcoin at lower prices than the sales price, so each of us needs to be careful with the quantity of BTC that we are selling at various prices that we consider to be toppy, even if we might have had some success in the past with that (not that you (LFC) were expecting to necessarily be able to buy back cheaper, so surely I am not specifically talking about your case).. even though surely you realize that I already subscribe to a kind of philosophy of ongoing selling of BTC on the way up (especially once we have overly accumulated) in order that we do not end up getting too emotional about how the dollar value of our BTC stash has gone up and if we might feel that we are ONLY seeing such dollar value "on paper" rather than in our real world abilities to purchase hookers, lambos and blow.  

Surely, MSTR / Saylor has a bit of a different philosophy in terms of never selling any of his (or his company's) BTC, and even acquiring at % of networth (% of investment portfolio) levels that seem quite excessive as compared to what normal individuals would be able to tolerate. and surely for Saylor himself (having 4 yachts and at least a couple of mansions), he is likely not anyone who is short of cash or abilities to support himself or to live comfortably outside of his bitcoin holdings - even though if sometimes he seems quite extreme in his bitcoin accumulation.. not just quantity but percentage of his networth (investment portfolio).

[bitebits]

MSTR Second quarter financial results
https://www.microstrategy.com/investor-relations

Microstrategy introducing a BTC Yield KPI. So a net increase in bitcoin per share after any share dilution. Target is 4-8% per year for 2025, 2026, 2027. YTD shareholders already seen a 12.2% increase in their bitcoin/share.




There is a second best:

[fillippone]

MSTR Second quarter financial results
https://www.microstrategy.com/investor-relations

Microstrategy introducing a BTC Yield KPI. So a net increase in bitcoin per share after any share dilution. Target is 4-8% per year for 2025, 2026, 2027. YTD shareholders already seen a 12.2% increase in their bitcoin/share.

This BTC Yield is the most interesting passage of the press conference.
I have read a Linkedin post about it:

MicroStrategy (NASDAQ: MSTR) just had their Q2 earnings call. It is pioneering a new Bitcoin Yield KPI, which is aligned with their rebranding in Q4 2023 as the world's first Bitcoin Development Company.

In their words: "We define BTC Yield as the period-to-period percentage change in the ratio of our total bitcoin holdings to our assumed diluted shares outstanding."

And: "We believe this KPI can be used to supplement an investor’s understanding of our decision to fund the purchase of bitcoin by issuing additional shares of our common stock or instruments convertible to common stock."

This is really spelling it out for folks who still don't understand why the stock trades at 2x its underlying bitcoin holdings. (See Kerrisdale here: https://lnkd.in/eFStB7BP)

What's the reason for the premium? The shares are accretive! One look at this slide below tells the story of why MSTR isn't a Bitcoin ETF and shouldn't be priced at NAV. While each share of a Bitcoin ETF represents the same amount of bitcoin forever, each share of MSTR has increased its bitcoin holdings over time.

It's the same reason why a stock's price to book ratio might be above 1. As an investor, you expect the book value to grow over time, so of course you don't price the equity itself at book value. To make it even simpler, if you had a dollar bill that could magically generate a nickel each month, would you sell this dollar bill for a dollar or perhaps a little above the book value of that dollar?

The reason this isn't intuitive for MSTR is because we aren't used to thinking in bitcoin terms. People still think in dollar terms, and this is causing them to miss the plot entirely. One advantage of thinking in bitcoin terms is that you massively outperform on dollar terms. It imposes a brutally high bar on your investable universe. When your hurdle rate is bitcoin, you won't be wasting money.

If someone will give you dollars at a low cost of capital, you take it to buy bitcoin. This is the whole strategy of hashtag#MSTR. It arbitrages the difference in the perceived costs of capital between the waning fiat standard and the coming Bitcoin standard.

I think we'll see this KPI on more companies as they get on the Bitcoin standard. Having a positive BTC Yield will likely be an expectation. People will think: "I want to buy businesses which can grow their BTC holdings so that the total BTC I own is growing without me doing anything."

Replace "BTC" with "dollars" or "cash" and it still makes sense.

hashtag#bitcoin hashtag#btc hashtag#microstrategy hashtag#earnings hashtag#finance

source

[ginsan]

$MSTR's BTC per share continues to climb, reaching a new high this quarter.

This is probably the most important metric to judge the success of MicroStrategy's Bitcoin acquisition strategy.



source

In current developments MicroStrategy has had great success in their journey with bitcoin. The steps taken by Saylor have attracted great attention from Bitcoin investors because the steps taken by Saylor are buying and holding, currently their BTC holdings have reached 226,500 BTC.