So long as there is information asymmetry, most of wall street will miss the rally of mstr to over $1,000/sh before eoy 2024 I have a feeling that mstr will announce another big purchase of bitcoin today Monday 11/25/2024 as mstr did the previous week, and also as mstr did the week prior to last This will lower the mNAV, mstr share price rallies, and who knows, mstr issues another debt convert 0 coupon and 55% premium convert price And Nasdaq-100 inclusion on Friday is on the table, it's going to be a glorious Christmas if mstr gets added
How many CEF's in existence has increased their asset base accretive to the shareholder by 40% ytd? How many CEF's has ever issued 5 convertible debt in 1 year and be oversubscribed every single time? In fact how many companies in existence has ever done so? How many CEF's has announced the biggest ATM share offering on record and the share price actually went up? In fact has a company ever accomplished such a feat? How many CEF's has ever sold $4.6B ATM share in one week and the share price went up 25%?
**** no financial advice on this post, it's for weekend entertainment, and I have no education in finance **** [current mNAV has decreased to 2.3x due to the recent mstr purchase of 55.5k bitcoin and lower stock price] In trying to understand mstr, there are comparisons to other public companies of similarities A typical company, let's pick AAPL another tech company, is driven to optimize PNL , they buy and sell, buy raw materials, buy manufacturing services and employees and contractors productivity, buy creativity, r&d, and combine to make and sell products such as iPhone or Apple App store And with the profits, they give back to the shareholders in the form of dividends or share buybacks to increase shareholder value through higher stock price mstr used to be like that, when the main focus of the company was its software business intelligence today, mstr is different and is driven t optimize its balance sheet, which is focused on its prized asset that is bitcoin Instead of buying and selling, mstr now sells and buys mstr sells ATM shares and buys bitcoin, mstr sells convertible debt and buys more bitcoin, also the profits from the software business is used to buy bitcoin, but the amount is negligible compared to the first 2 products As a result of going into the bitcoin strategy asset accumulation since Aug/2020, mstr went from a company that had $500M cash in its balance sheet $1-2B market cap to a company that currently holds over $37B worth of bitcoin asset, with convert debt liabilities of $7.2B at average interest rate of 0.62%(?) and a market cap of $89B (yahoo finance) ------------------------- My attempt at a comparison to a Closed End Fund Say, we have a CEF that owns a 1000 unit building in Manhattan and through strong earnings has distributed a dividend of 60% ytd 2024... That's similar to mstr that has a current btc yield of 59.3 ytd, no? Not really The CEF gives a yield based on $, the mstr yield is in asset form, to be of similar apples to apples, the CEF would not disburse the earnings in dividend form, but instead, purchase a 600-unit building with exactly the same as the 1000-unit building Why does it matter, $ and bitcoin (and for that matter $ and Manhattan unit)? Asset is more valuable than $, in the case of bitcoin and also in the case of the Manhattan unit that has big earnings bitcoin price is up over 125% ytd First quarter of next year 2025, mstr will start to incorporate m2m profits on their bitcoin... Using mNAV of 1x seems too low for mstr that is growing its balance sheet , just like other tech stocks are valued for future sales and profits, perhaps some consideration for a higher mNAV as the market is currently trading for --------------------------------------- And something I came across on Twitter, wrt to owning bitcoin vs owning mstr shares some roundings for easy math (which is not my strength) If you buy 1000 mstr shares currently cost you $390k, or you can buy 4 bitcoin How about purchase 1000 mstr shares for $390k and sell covered call for Jan 2027 $780 strike premium of $180k use the proceeds to purchase 2 bitcoin (add $12k out of pocket) So now, you own 1000 shares of mstr but with contingencies of having to sell it for for double your cost basis in 2 years and you also own 2 bitcoin Instead of owning 4 bitcoin with your $ you own 2 bitcoin, but the 2 bitcoin you own less of today may be worth $780k in 2 years and if it's worth less than $780k in 2 years, you will be rewarded with 1000 mstr shares free and clear whatever that value may be to you as priced by the stock market The story of mstr is still being told... mstr is selling ATM shares and convertible debt $21B of each product, mNAV to the moon, lets go
As much as I agree with this assessment, I think its also important to consider the other side. Mathew Kratter just posted about this a day ago. In the slight, slight chance that bitcoin plummets, you're losing the premium above holding Bitcoin, and all that debt will need to be serviced/re-paid without being converted to equity if I remember correctly. This means that you lose more than what you will lose if holding just bitcoin. As I outlined earlier, I fully believe bitcoin, but I also wouldn't be surprised in a massive dump when everything is going to shit. Bitcoin will rise from the ashes of course, but if MSTR is forced to sell bitcoin to pay back the debt, they will add to the selling, and you lose much more on your shares than you would with holding bitcoin outright.
Sorry that was a specific example, basically comparing a 4 bitcoin vs 2 bitcoin + mstr 2-year CC, tl;dr ----------- But this is why there is a war going on between the mstr maxis and bitcoin maxis As Preston Pysh have said a year ago, his financial investment in mstr is very small compared to cold-storage bitcoin, but... it has grown I'm the same way, I can show my exact ET post of when I put the first mstr leap calls position during the bear market in June of 2022 ($27k at the time when I put the position) I even explained it was equivalent to a 1 bitcoin portfolio allocation and if bitcoin went down to $25k, as part of my risk-management, cash-management, I will sell the 1 bitcoin from cold-storage holding. bitcoin went much lower than $25k afterwards and from that $27k, it has grown quite a bit, with a couple of trades closed out, and an an ongoing calls position still, allocated from profits TL;DR, not financial advice BUT this is exactly what bitcoiners have said about investing in mstr, it should be a very small investment allocation compared to cold storage bitcoin holdings, but if it grows due to mstr outperformance (4-5x that of bitcoin ytd), then perhaps a rebalance back to bitcoin or whatever suits the situation, cash/fiat in my case, and mstr shares long term 5-10 years other bitcoiners are doing the same, American Hodl, British Hodl, there's a few more on Twitter, always treat bitcoin separately from mstr which is a tradfi bitcoin-proxy investment and not a replacement ----------- So the above is just to re-iterate that mstr and cold-storage bitcoin are separate, and always have been, you can search Preston Pysh and American Hodl videos from over a year ago But this right here is where I take issue with the bitcoiners who are spreading fud, saying mstr will sell bitcoin to pay debt first of all mstr bitcoin is unencumbered, debt holders cannot force mstr to sell them to payoff the debt Second of all, these are interest only, and in the case of the one issued a week ago, 0% interest, and the interest payment for all the convertible debt per year is $30'sh Million, NOT A SUBSTANTIAL AMOUNT, NOT A BURDEN They mature at different years, well into 4+ years, any bitcoiner who believes that bitcoin could be much lower than it is 4 years prior is not a bitcoiner and should not be hodling, because that bitcoiner needs to study bitcoin more Here's the debt convertible table and I have not watched the video, but anyone fudding mstr will sell bitcoin to satisfy debt, should go through the scenario where bitcoin is so low in 2027 and later that a $100B market cap mstr will be reduced to ashes and be forced to sell their bitcoin asset We're talking about $20k/bitcoin or lower in 2027? $10k/bitcoin? $1k/bitcoin? $100/bitcoin? I DO NOT SEE IT IT IS AN INSIDIOUS FUD being propagated
I listened to the video... Kratter is a bitcoiner and the level of fud to target mstr without realizing the fud is just as bad if not worse for bitcoin, smh mstr sold over $7B ATM shares in the past 3-4 weeks, this is not debt, and purchased bitcoin, but somehow, the video says that mstr will wait until 2027 and that debt coming to maturity has not not been converted to shares, even as the share price is much higher, in whatever scenario is possible, mstr will wait 2 years and be blindsided by this debt that is maturing on Feb/2027 And casually, Matt mentions bitcoin at $20k just as mstr debt is maturing in 2027, debt that should be by all measures currently should be retired way before Casually, he says bitcoin will stay low at that level for years, as mstr debt matures in 2028, 2029, 2030, and on and on this is all mstr only???? No, bitcoin is dead if that happens bitcoin spot etf's started when bitcoin was at $40k, he's saying after $40B+ of bitcoin spot etf's buying bitcoin from pension funds, from banks, from institutional investors, that bitcoin will crash to a level 50% lower than when the bitcoin spot etf's started bitcoin will be dead for that to happen. That's a bitcoiner who hates mstr that much he's willing to put a fud of bitcoin crashing and dying in 2027 and later years
I've been following Kratter's youtube for quite some time now. The problem, (if it is), is that he's a Bitcoin Maxi, so take that into account. According to him, Ethereum and everything else is total shit and should be abolished. He also has a love for bitcoin miners - until they start mining stuff like Kaspa, then he's not so nice to that party. lol
I tend to agree. I love Bitcoin maxi's, so don't get me wrong, but there are clearly going to be many other coins that outperform. But here is the thing. Who is going to time this properly? Who is going to take profits? Who is going to ride it all the way down and cry when it never recovers? Also, just because a project is useful, does that justify the market cap? If people get into crypto in general, and get rug pulled, and then blame bitcoin, this will absolutely be the wrong take. This is where some well meaning government officials I think struggle. They hear of all the shady stuff, and now bitcoin gets lumped into this pile of crap. As for ETH, I'm sad to say I got out before the elections at around $2500, so missed this 40% rally, but when you consider that so many of these projects have so much to keep track of, like VC unlocking and selling, or simply how many new coins need to be created to keep it all going, you have to really wonder about the long term viability. I've been slowly selling off my SOL, some at not great prices, some at the highs, so I'm happy about this, but its hard to remain bullish when you find out about the tokenomics. If it wasn't for the memecoin crazy, SOL would have likely never recovered. I remember at the lows feeling quite sad about the whole thing when I learned that is was a heavily backed project from FTX. At the time, it couldn't have looked worse. So when you consider all of these things, its hard to not be just a Bitcoin maxi. I think we all agree that if we look out 5 to 10 years, there is only one thing that most of us have faith in still being around.
Ethereum is 9 years old already... I wouldn't say there's only 'one' thing most have faith in. Then again... there are a shitload of Maxis out there. Hmm...