(Bloomberg) — Michael Saylor’s decision in 2020 to start buying Bitcoin paid off in a big way this year for the MicroStrategy co-founder and executive chairman.
Most Read Articles on Bloomberg
Based on data compiled by Bloomberg, Saylor earned an estimated $400 million or so from pre-planned daily sales of about 5,000 shares of the enterprise software company between January and last week. The sale of shares is in conjunction with the exercise of options granted in 2014 that expire. The stock has doubled this year to around $1,290, outpacing the original cryptocurrency's record gains over the same period. At the end of 2014, MicroStrategy was trading at approximately $160.
The outperformance of Tysons Corner, Va.-based MicroStrategy's stock appears to be overshadowing investor concerns that controlling shareholder Mr. Saylor would sell at the highest price. In a conference call in November, Saylor said he has been paid $1 for more than 10 years and has not received any cash bonuses. He said at the time that he could exercise the option to not only meet some obligations, but also buy more Bitcoin in his account.
“I think there's a bigger buzz in the media than there is in investors,'' said Lance Vitanza, managing director at TD Cowen, who has a “buy'' recommendation on MicroStrategy. he said. “Investors are aware that Saylor still owns a large stake.”
Still, MicroStrategy's premium over Bitcoin has started to raise eyebrows since the introduction in January of U.S. exchange-traded funds (ETFs) that can hold cryptocurrencies. Kerrisdale Capital Management LLC announced in March that it was shorting the stock as it outpaced the rising price of digital assets.
“The biggest question for me is why would I buy MSTR at a premium over the spot when I could just buy an ETF right now?” He is an adjunct professor at Columbia Business School and director of blockchain companies. said Austin Campbell, who is also a consultant. MicroStrategy is a retail magic belief stock like PLTR, TSLA, and GME. They tend to defy fundamentals and trade purely on vibes. It could last a while, but it won't last forever. It won't last.''
Meanwhile, MicroStrategy announced Monday that it booked a loss of $53 million in the first quarter after taking an impairment charge on the value of its Bitcoin holdings, even though Bitcoin soared during the period. did.
Under current accounting rules, MicroStrategy is unable to recognize increases in its Bitcoin holdings, including an increase of approximately 67% in recent quarters. This situation is changing under recently passed accounting rules that require digital assets to be valued at market prices. Companies must implement this reform by 2025. MicroStrategy did not adopt this amendment in the first quarter and instead recorded a digital asset impairment loss of $191.6 million.
Since MicroStrategy began buying digital assets as part of its efforts to hedge against inflation, the value of its Bitcoin holdings has increased to about $13.5 billion.
The company's Bitcoin Cash has increased by 25,250 points since the end of the fourth quarter. MicroStrategy reportedly holds 214,400 Bitcoins as of April 26th.
“Saylor has a simple strategy for MSTR: sell stocks and bonds and use the proceeds to buy BTC,” said Jeff Dorman, chief investment officer at digital asset management firm Arca. Ta. “When BTC rises, MSTR’s stock price also rises, so MSTR can sell more stocks/bonds and sell them again.”
(Add financial details in the 7th paragraph.)
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
