Why MSTR is the Best Thing Since Sliced Bread! 🍞💰

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So, here we are, folks! Strategy (NASDAQ: MSTR), the SaaS-based business intelligence company that used to be MicroStrategy (you know, the one that decided to throw a bitcoin party and forgot to invite the skeptics), is strutting around with a market cap of $73 billion! That’s about 1.6 times the value of its bitcoin stash. This “MSTR premium” has folks scratching their heads, rolling their eyes, and maybe even throwing a few tomatoes. But fear not! With a decade of experience in the equities circus, we’ve got three reasons why this premium is as justified as a clown at a funeral. đŸŽȘ

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CHART: MSTR’s premium to NAV

First off, Strategy is like that friend who borrows money to invest in bitcoin, hoping to make a killing! They’re issuing equity and debt, and making money off the difference between bitcoin returns and their cost of capital. It’s like playing poker with your grandma—she thinks she’s winning, but you’re just waiting for her to fold! And guess what? This carry isn’t just a one-time deal; it’s a recurring gig! Investors are pulling future BTC carry into the present like it’s a magic trick! đŸŽ©âœš

Next up, Strategy is cashing in on smart capital markets issuance. They’re like the magician who not only pulls a rabbit out of a hat but also gets paid for the show! They’re issuing convertible debt and getting paid to offer bitcoin-like returns. It’s like selling ice to Eskimos! And when they issue equity at twice the book value? That’s like selling a $1 bill for $2! Who wouldn’t want that deal? Last year, they managed to increase their bitcoin per share by 74%! That’s 140,630 BTC, or $14 billion for shareholders. Talk about a magic trick! đŸȘ„đŸ’ž

Finally, let’s not forget the wild west of crypto! Bitcoin and its buddies are still in their infancy, and they’re growing faster than a weed in a garden! đŸŒ± The price of bitcoin has a tendency to rise over time, and that’s a fact! So, if you’re not convinced yet, let’s play a little thought experiment: If I had a magic bank account with $100 that paid you a 69% interest rate, how much would you pay me for that? Probably more than $100, right? That’s exactly what’s happening with MSTR! They’ve been increasing their BTC per share at a whopping 69% annual rate since August 2020. It’s like watching a rocket take off! 🚀

Of course, there are risks—like a clown at a serious meeting! MSTR investors are taking on basis risk with BTC prices, and the stock can swing more than a pendulum. The premium might go up or down, and during bear markets, it could trade at a discount. But hey, investors believe MSTR will keep increasing its bitcoin per share, and they’re willing to pay for that dream! 💭

CHART: MSTR’s increase in bitcoin per share (i.e. bitcoin yield)

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates. (No clowns were harmed in the making of this article!)

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2025-02-26 20:15