$MSTR unrealized losses, does this really matter?

[nemesis_incarnate]

honestly i dont think it matters much as long as they have the cash flow to service their debt. unrealized losses are just numbers on paper until you actually sell and we all know saylor isnt selling a single sat. as long as bitcoin goes up in the long run this strategy is going to pay off big time. the market always freaks out over volatility but people who get the game know this is a long term play.

nobody just crashed hard enough from it like exchanges or projects alike. one day it will happen

[Free Market Capitalist]

Serious question: do you trust him more or less than CEOs/presidents of other companies?  Because I have to tell you, they've been known to lie, steal, or just about anything else to enrich themselves at the expense of their shareholders.  But aside from all of that, there's the more banal possibility that Saylor could either change his mind about the path he's on OR be forced to sell.

I think he has won over the audience because he is an intelligent guy who speaks very well and has made a point of attending every event or podcast he has been invited to in order to talk about Bitcoin.

But we must not forget that in 2001 he agreed to pay an $8 million fine and rewrite his company's accounts to avoid jail time. If we are normally skeptical of company CEOs, in this case we should be even more so.

This was in the midst of the dot-com bubble, which caused MSTR's stock to collapse from $333 to less than $2.



That alone should make us think but I also think an overall picture should make us reflect.



With this, I think that being cautious about believing what he says is the least we should do.

[Alex077]

 According to the company’s founder, Michael Saylor, Strategy  plans to reduce the debt on its balance sheet over the coming years by converting about $6 billion worth of convertible notes into equity.

In plain English, that means Saylor intends to gradually turn the company’s creditors into shareholders by converting outstanding convertible bonds into common stock.
Right now, the company is sitting on roughly $6 billion in convertible debt and about $49 billion in Bitcoin assets at current prices, with more than 714,000 BTC on the balance sheet - so for the moment, there’s still a pretty decent cushion.
  https://x.com/saylor/status/2023107433577717852?s=20
That said, while this move may help shield the company from refinancing pressure caused by its rather aggressive Bitcoin accumulation strategy, the conversion also means dilution for existing shareholders once that debt turns into newly issued shares - something that’s already happening at a noticeable scale. This could have a pretty noticeable impact on $MSTR’s price in the short term.
So yeah, Saylor keeps walking that fine line, trying to balance between two fires… and so far, he seems perfectly comfortable living there.
 

[Free Market Capitalist]

 According to the company’s founder, Michael Saylor, Strategy  plans to reduce the debt on its balance sheet over the coming years by converting about $6 billion worth of convertible notes into equity.

What must be taken into account here is that the notes are only convertible if MSTR shares reach a certain price. As of today, they could not be converted. I believe that, given the way they are structured, it is most likely that they will be able to convert them, but if they cannot, they will have to pay in cash.

[Alex077]

 According to the company’s founder, Michael Saylor, Strategy  plans to reduce the debt on its balance sheet over the coming years by converting about $6 billion worth of convertible notes into equity.

What must be taken into account here is that the notes are only convertible if MSTR shares reach a certain price. As of today, they could not be converted. I believe that, given the way they are structured, it is most likely that they will be able to convert them, but if they cannot, they will have to pay in cash.

Yeah, that’s a fair clarification...
The whole Strategy play has basically been: BTC up, MSTR up, and once the price is high enough, turning debt into equity becomes a no-brainer. At that point the debt basically turns into equity without the company having to come up with cash.
Realistically, both the company and the bondholders entered these deals expecting volatility and upside, not a flat or declining stock.

In other words, it’s not really about 'they can't convert today,” it’s more about ,,conversion only happens if the investment thesis keeps working.” And in MSTR’s case, that thesis is basically Bitcoin with leverage.

[MarryWithBTC]

So yeah… the guys are doing fine for now. Probably not the ones to worry about - unlike some other “Bitcoin treasury” companies out there. Looking at you, Metaplanet.

That's right. I've talked about this in other threads on the same topic. Strategy, despite being bullish on Bitcoin, has structured its obligations in such a way that it can easily weather a crypto winter like the one we seem to be facing.

But I don't think Metaplanet is at the top of the list. There are almost 200 of them, all failing or stagnant businesses that saw Bitcoin's treasury model as a way out.

Almost 200 of them.., I agree, this is were the real stress test lies. Many of these firms are not operating businesses with strong cash flow,  they are struggling companies attempting financial engineering. If we unfortunately enter a multi-year bear market and several of them are forced to sell BTC to service obligations, that would definitely challenge the narrative that the BTC treasury model is universally viable.

The problem that may arise is the questioning of the business model. If a significant number of these companies end up selling their bitcoin or going bankrupt, and if we don't have a Bitcoin ATH until after the next halving, I think the model will be called into question.

This would not invalidate the model itself, rather it would invalidate weak balance sheets. It will show the difference between a company using excess cash flow to accumulate BTC and the one levering itself aggressively without durable revenue.

For Strategy specifically, I think the product most at risk is STRC. All preferreds offered by Strategy are based on mathematical fiction; they are clearly junk preferreds. However, in the case of STRC, as Saylor continues to raise the dividend despite the declining profitability of the underlying asset, which is even negative, it is clearly the most junk of them all.

For now, they can pay the dividends because they created a cash reserve by selling MSTR and diluting shareholders, further proof that the underlying thesis does not work. However, in a hypothetical scenario where several Bitcoin Treasury Companies begin to fail and we have a couple of years of winter, I believe that the preferreds model will also be proven to be a failure.

The real question is nott whether some treasury companies will fail, because statistically, many will. The question is whether the capital structure of the largest players creates systemic selling pressure during downturns. In short, I think we are heading toward differentiation, not total collapse. Weak balance sheets will break. Strong ones may consolidate. That process would refine the treasury model rather than disprove it outrightly.

[SilverCryptoBullet]

MSTR has bet the farm on bitcoin and instead of it just being an alternative to fiat for the corporate treasury, it turned the corporation into one big gamble on the success or failure of bitcoin.  If you can say with a straight face that Saylor has enough funds to weather a market crash much bigger than what bitcoin is currently going through (it seems bigger than a dip to me), you should take off those orange BTClinders. 

Seems to me Saylor keeps piling on the risk with each bitcoin purchase he makes, but since nobody has ever done anything like this before it has a lot of people star struck.  I'm telling you, those awful new financial metrics like mNAV are a joke.  Wall Street has always had more greed than brains, so it might take a while but you'll see.

There is no institutional investor that is too big to be free from collapse especially if they are leveraging higher and higher with time. Strategy is the same like this and I admired their smart and determinant decision to start investing money in Bitcoin, and have kept doing this for several years. Their investment practice and disciplined accumulation are very motivational for many people, investors especially newbies. But the "disciplined" accumulation of Strategy was only good, and "safe" when they did took less risk, used less leverages than recent months.

Since this market cycle bull run, Strategy began to innovate more new risky strategies that they have never used in the last market cycle. It has made their "disciplined" accumulation in latest months is no longer safe for their Bitcoin treasury.

Time to collapse might come with Strategy if they continue leveraging more and more, it will break threshold of safety and collapse, then Strategy will become another big story in financial educational courses.

Hopefully they will realize it, wake up and change their practice before it's too late for any changes.

[Free Market Capitalist]

The real question is nott whether some treasury companies will fail, because statistically, many will. The question is whether the capital structure of the largest players creates systemic selling pressure during downturns. In short, I think we are heading toward differentiation, not total collapse. Weak balance sheets will break. Strong ones may consolidate. That process would refine the treasury model rather than disprove it outrightly.

In this regard, I believe Strategy has an advantage over the rest. It has structured its debt in such a way that it can withstand harsh bear markets, and as the first and largest holder of Bitcoins, it will have the easiest access to liquidity in difficult times.

[vanesha]

I believe that is often the purpose of the news. News tends to amplify or reinforce the existing market condition. For example, when the market is bearish, most headlines usually continue to support the bearish narrative until there are clear signs of a reversal. Be careful when following the news. Always analyze both the news and the market carefully before making any decisions.

[henry_of_skalitz]

I believe that is often the purpose of the news. News tends to amplify or reinforce the existing market condition. For example, when the market is bearish, most headlines usually continue to support the bearish narrative until there are clear signs of a reversal. Be careful when following the news. Always analyze both the news and the market carefully before making any decisions.

Agreed. It's easier to follow along than to make your own mind on something, but it's needed to not get burnt later down the line.

[SuperBitMan]

Do you think news like this is meant to create pressure or trigger panic, or they see this as non sense news?

Many companies such as Microsoft, Nvidia, Oracle, Tesla, etc lost experienced notable losses this period.

This your statement or write up will give confidence to a lot of bitcoin investors, sometimes I just see people talk about how risky bitcoin investment is but they forget other investments also experience loss, the only people that will be panicking because of the dip in bitcoin price are those who really don’t understand or know about the history of bitcoin, if you have a knowledge about bitcoin growth you should understand that dip has always been part of bitcoin and this will not be the last time bitcoin will dip so why should one panic.
I trust $MSTR they will keep accumulating more bitcoin because they understand how bitcoin growth works , just like I said they are not the only company that are facing loss right, we have many company that are also facing same issue, but the fact is that they will gain more than we are expecting so it is a good investment.

[OgNasty]

MSTR has a good strategy as far as screwing over their investors to stockpile Bitcoin in hopes that the Bitcoin appreciates fast enough to counteract their dilution of shares.  So far it hasn't.  There really isn't any market risk for Strategy though.  They have their preferred investments to raise capital and will continue dumping shares to buy more BTC.  The real reason that unrealized losses could matter is if investors start feeling like MSTR isn't looking out for shareholders and begin taking legal action.  Remember, it only took 1 investor with a dozen shares of Tesla stock to cost Tesla a fortune in legal fees and delay Elon's reward payment.  I can only imagine how many angry MSTR shareholders there are right now.  I think the situation is probably worse than Strategy is letting on.

[dansus021]

there is a imaginery lines called the "Saylor Lines" basically this is the price how much saylor or in here Micro Strategy average buy of bitcoin.

BTC ₿ 717,131
Acq   Avg BTC $76,027   $54,521   
Cost   Acq Cost ($M)   BTC ₿ 717,131

From this alone you might notice that Saylor line is stiing around 76K and bitcoin price today is around 68K, the company said wont sell bitcoin unless its necessary but it keep buying the crypto since they still have billion of cash to buy more and more

[GreatArkansas]

MSTR has a good strategy as far as screwing over their investors to stockpile Bitcoin in hopes that the Bitcoin appreciates fast enough to counteract their dilution of shares.  So far it hasn't.  There really isn't any market risk for Strategy though.  They have their preferred investments to raise capital and will continue dumping shares to buy more BTC.  The real reason that unrealized losses could matter is if investors start feeling like MSTR isn't looking out for shareholders and begin taking legal action.  Remember, it only took 1 investor with a dozen shares of Tesla stock to cost Tesla a fortune in legal fees and delay Elon's reward payment.  I can only imagine how many angry MSTR shareholders there are right now.  I think the situation is probably worse than Strategy is letting on.

Another thing I'm curious about investor in the MSTR company, like it's becoming a Bitcoin company, as we all know it's a tech company. Plus, if other investors want to invest in MSTR just because they are into Bitcoin, then why not buy Bitcoin directly, or even a Bitcoin ETF?
Because I noticed, the MSTR stock price started to become correlated with Bitcoin, starting when they started buying more Bitcoin.

[makishart]

Won't be a problem until it trigger default events, Saylor is a genius in raising money to buy bitcoin. The billions he invested to bitcoin made of unsecured convertible senior notes that even if mNAV went under the weather the lender couldn't force sale of the asset.

Now we all get it, the fud about mNAV going negative that could trigger unwinding of holding to repay debt is an utterly misunderstanding of how MSTR's issued convertible bond works.

[MinMan]

He mad an explanation that they can wait until the price hits 8k and they will still be in cash positive about it. I would say that while that may not be true, it's still true that at 20k they will be fine, and we are not going there or under anyways, so it is going to be fine for them.

The reason why they got this much trouble as a software company is because of the debt they took on, and while it is true that they have too much debt because of it, they have grown their position significantly and I think when the price goes up, they will be in a very fine situation.

[Alex077]

 Looks like Saylor is at it again...))
 Sunday rolls around and Saylor drops another cryptic teaser on X - just a giant ,,X,” the words ,,Orange Age,” and a StrategyTracker snapshot of all their bitcoin buys going back to August 2020.
 https://x.com/saylor/status/2025563773784695206
Veterans know the drill by now. A mysterious Saylor post almost always signals another BTC purchase on deck. He’s repeated this routine again and again.
As of now, Strategy is sitting on 717,131 BTC, bought at an average price of $76,027 across 99 separate purchases. Which means… yeah, they’re probably lining up buy number 100.
As expected, the MSTR stock popped 6% out of the gate on the hint, then gave back around 3.75% once volatility rolled through,  the market basically trades off Saylor’s breadcrumbs at this point...

upd. And yep - sure enough, Strategy went ahead and bought another 592 BTC for about $39.8 million, paying roughly $67,286 per coin.
That brings their total stash to 717,722 BTC, acquired for around $54.56 billion at an average price of $76,020 per bitcoin.

[Alex077]

Serious question: do you trust him more or less than CEOs/presidents of other companies?  

But we must not forget that in 2001 he agreed to pay an $8 million fine and rewrite his company's accounts to avoid jail time. If we are normally skeptical of company CEOs, in this case we should be even more so.
This was in the midst of the dot-com bubble, which caused MSTR's stock to collapse from $333 to less than $2.

Let’s take a slightly closer look at this situation.
Back in March 2000, right at the peak of the dot-com bubble, MicroStrategy announced it had to restate two years of financial results because of accounting ,,errors.”
That suddenly turned into a very serious problem for investors - and for the market.
 Once the company’s paper profits (the good old fiat kind) were wiped off the books, MicroStrategy’s stock dropped 62% in a single day. Just like that. Saylor’s personal net worth, which was estimated at around $13 billion at the time, shrank by roughly $6 billion in one trading session. One of the biggest single-day personal wealth wipeouts the market had ever seen.
Most people would disappear after something like that. Not Saylor.
After losing billions in the dot-com crash, he eventually staged a comeback - this time by going all-in on Bitcoin.

According to Forbes, as of May 22, 2025, Saylor’s net worth is estimated at around $7.3 billion. He owns approximately 19,998,580 shares of Strategy, about 9.9% of the total shares outstanding - and roughly 45% of the voting power. So yeah, he’s still very much in control of the ship.
 https://www.ccn.com/news/business/michael-saylor-net-worth-explained/
On top of that, he personally holds more than 17,000 BTC, currently worth around $1.89 billion after Bitcoin tagged a new all-time high at $126,000.
So that’s Michael Saylor when you zoom out a bit.
Given his well-known appetite for risk, could history repeat itself? Sure, markets have a sense of humor. But to be fair, the guy has a track record of finding unconventional solutions and clawing his way back.

[Free Market Capitalist]

Looks like Saylor is at it again...))

It doesn't seem like he has any other choice. If he came out and said he was suspending Bitcoin purchases indefinitely, can you imagine how the market would react? And I'm not just talking about Bitcoin, but also his company's shares.

And yep - sure enough, Strategy went ahead and bought another 592 BTC for about $39.8 million, paying roughly $67,286 per coin.
That brings their total stash to 717,722 BTC, acquired for around $54.56 billion at an average price of $76,020 per bitcoin.

Which highlights the main problem of his system. He buys a lot when the market is overheated but little to nothing when it is bearish.

[fikrett]

^ All the companies with the shares would scream about it too. Just as they do when the market become bearish..