I like Saylor and I think he's done a lot to spread word about Bitcoin and build his own brand. As bitcoin became more popular so did Microstrategy, so Saylor found a way for his company to benefit from a miracle that bitcoin is, because to go from below $1 in price to almost $100k is a miracle. No asset does that.
That said, I would not buy MSTR over bitcoin right now. IMO it's a bit overpriced and has a much less room to grow. Also, MSTR can crash on its own, for instance due to some internal problems, division, Saylor's death, or something else, but bitcoin doesn't care. It does not depend on MSTR, unless Saylor dumps everything, but even if that happens bitcoin will recover faster than MSTR stock.
Topic: Do you understand why MicroStrategy's market cap is larger than BTC holdings? (Read 310 times)
November 29, 2024, 02:23:30 PM
November 29, 2024, 01:42:10 PM
In fact, Microstrategy's strategy is doing well in accumulating bitcoin. What he is doing is being done by other big companies because they saw the results of what Microstrategy did. So he also did a good job that also gives influence to other big investors who will also buy a large amount of bitcoin in fiat.
So if microstrategy now has bitcoin holdings of 386,700btc, just multiply it by x5 and it will be around 178.5B$ dollars, which will immediately return to him,
the only thing he did was buy and hold.
So if microstrategy now has bitcoin holdings of 386,700btc, just multiply it by x5 and it will be around 178.5B$ dollars, which will immediately return to him,
the only thing he did was buy and hold.
And he bought with other people's money, and he only intends to share a fraction of the profits those people would have made had they simply bought Bitcoin directly.
Great work if you can get it
.
November 29, 2024, 08:33:00 AM
In fact, Microstrategy's strategy is doing well in accumulating bitcoin. What he is doing is being done by other big companies because they saw the results of what Microstrategy did. So he also did a good job that also gives influence to other big investors who will also buy a large amount of bitcoin in fiat.
So if microstrategy now has bitcoin holdings of 386,700btc, just multiply it by x5 and it will be around 178.5B$ dollars, which will immediately return to him,
the only thing he did was buy and hold.
So if microstrategy now has bitcoin holdings of 386,700btc, just multiply it by x5 and it will be around 178.5B$ dollars, which will immediately return to him,
the only thing he did was buy and hold.
November 29, 2024, 08:19:12 AM
It also helps to understand that if they can issue debt and shares to buy $42 billion (1/2 each) in bitcoin over the next 3 years that would buy ALL of the new supply of bitcoin for about 18 months at current prices - which is what they announced just before Halloween this year (2024). If they can issue debt to buy $100 billion or something after that they are essentially sopping up a huge amount of the new supply so there is very little for anyone else except from current owners. Either more people will sell or the price will have to go up until they wish to do so.
It almost becomes a self-fulfilling prophecy if their purchases can really impact the market this much and they have. As long as demand continues both from them and elsewhere this can continue.
As far as buying MSTR, it certainly has had a great run and if they can take 70% of the profits from the bonds then that could explain why people are willing to pay a premium.
It almost becomes a self-fulfilling prophecy if their purchases can really impact the market this much and they have. As long as demand continues both from them and elsewhere this can continue.
As far as buying MSTR, it certainly has had a great run and if they can take 70% of the profits from the bonds then that could explain why people are willing to pay a premium.
Wow, I didn't even think about that. MSTR borrowing $$ to effectively purchase all of the Bitcoin supply anticipated to be coming in over the next 18 months, it certainly has a major impact on the price. However, at the same it's a bit concerning. I don't really want to live in a world where a single corporate owns like 1 million BTC out of the entire supply of 21 million. I feel like that will lead to centralisation in a sense.
Would we be able to do something with it, though, even if we feel that way?
That's the question I am asking myself.
November 29, 2024, 08:10:26 AM
It also helps to understand that if they can issue debt and shares to buy $42 billion (1/2 each) in bitcoin over the next 3 years that would buy ALL of the new supply of bitcoin for about 18 months at current prices - which is what they announced just before Halloween this year (2024). If they can issue debt to buy $100 billion or something after that they are essentially sopping up a huge amount of the new supply so there is very little for anyone else except from current owners. Either more people will sell or the price will have to go up until they wish to do so.
It almost becomes a self-fulfilling prophecy if their purchases can really impact the market this much and they have. As long as demand continues both from them and elsewhere this can continue.
As far as buying MSTR, it certainly has had a great run and if they can take 70% of the profits from the bonds then that could explain why people are willing to pay a premium.
It almost becomes a self-fulfilling prophecy if their purchases can really impact the market this much and they have. As long as demand continues both from them and elsewhere this can continue.
As far as buying MSTR, it certainly has had a great run and if they can take 70% of the profits from the bonds then that could explain why people are willing to pay a premium.
Wow, I didn't even think about that. MSTR borrowing $$ to effectively purchase all of the Bitcoin supply anticipated to be coming in over the next 18 months, it certainly has a major impact on the price. However, at the same it's a bit concerning. I don't really want to live in a world where a single corporate owns like 1 million BTC out of the entire supply of 21 million. I feel like that will lead to centralisation in a sense.
November 27, 2024, 02:32:05 PM
It also helps to understand that if they can issue debt and shares to buy $42 billion (1/2 each) in bitcoin over the next 3 years that would buy ALL of the new supply of bitcoin for about 18 months at current prices - which is what they announced just before Halloween this year (2024). If they can issue debt to buy $100 billion or something after that they are essentially sopping up a huge amount of the new supply so there is very little for anyone else except from current owners. Either more people will sell or the price will have to go up until they wish to do so.
It almost becomes a self-fulfilling prophecy if their purchases can really impact the market this much and they have. As long as demand continues both from them and elsewhere this can continue.
As far as buying MSTR, it certainly has had a great run and if they can take 70% of the profits from the bonds then that could explain why people are willing to pay a premium.
It almost becomes a self-fulfilling prophecy if their purchases can really impact the market this much and they have. As long as demand continues both from them and elsewhere this can continue.
As far as buying MSTR, it certainly has had a great run and if they can take 70% of the profits from the bonds then that could explain why people are willing to pay a premium.
Yes, what he is doing has been compared to the famous Hunt Brothers who cornered the silver market in the 1980s. This worked great for silver investors until it didn't.
November 27, 2024, 01:51:48 PM
MicroStrategy (MSTR) and its Executive Chairman, Michael Saylor, have gained significant attention in the last few weeks alone, mainly due to the company's strategy for acquiring significant Bitcoins, which has ramped up the company share price exponentially. Whilst MicroStrategy initially was a software company, they have really become a Bitcoin acquiring company, with their company valued based on their cryptocurrency holdings.
There are many things in which people don't know about this tech company, they have their own personal strategy on investment, while they are still running their software development regularly, there is more to understand behind their decision for making all these, in doing a business, we must be very disciplined in seeking for opportunities in more than one source, from there, they try to get the public attention, attracting their possible investors as well in their services and also seize an investment opportunity together, from there they have been maintaining building a rapid investment which turns profitable over time.
November 27, 2024, 12:36:17 PM
It also helps to understand that if they can issue debt and shares to buy $42 billion (1/2 each) in bitcoin over the next 3 years that would buy ALL of the new supply of bitcoin for about 18 months at current prices - which is what they announced just before Halloween this year (2024). If they can issue debt to buy $100 billion or something after that they are essentially sopping up a huge amount of the new supply so there is very little for anyone else except from current owners. Either more people will sell or the price will have to go up until they wish to do so.
It almost becomes a self-fulfilling prophecy if their purchases can really impact the market this much and they have. As long as demand continues both from them and elsewhere this can continue.
As far as buying MSTR, it certainly has had a great run and if they can take 70% of the profits from the bonds then that could explain why people are willing to pay a premium.
It almost becomes a self-fulfilling prophecy if their purchases can really impact the market this much and they have. As long as demand continues both from them and elsewhere this can continue.
As far as buying MSTR, it certainly has had a great run and if they can take 70% of the profits from the bonds then that could explain why people are willing to pay a premium.
Here is how to explain MSTR right now.
Imagine you have a friend who has a relationship with a bank and can borrow money on margin. You give him $1000, and he can borrow $5000, using the $1000 as a down payment.
Now your friend buys Bitcoin with the $5000, which he pledges as collateral for the loan with the bank: if Bitcoin goes down by 20%, the bank forecloses and you both lose everything since the bank would be underwater if they didn't collect.
Now imagine the deal with your friend was this: if Bitcoin goes up, and the investment profits, then you only get 30% of the profit and your friend gets 70%.
MSTR at a ~300% premium over their actual BTC holding last I checked, so the above is basically what is going on here.
I get wanting to buy Bitcoin on margin (super risky, high reward), but essentially giving MSTR a 3x premium for just doing it for you is pretty silly. If you want to buy BTC on margin, then... buy BTC on margin and keep 100% of the profits, not 30%.
Imagine you have a friend who has a relationship with a bank and can borrow money on margin. You give him $1000, and he can borrow $5000, using the $1000 as a down payment.
Now your friend buys Bitcoin with the $5000, which he pledges as collateral for the loan with the bank: if Bitcoin goes down by 20%, the bank forecloses and you both lose everything since the bank would be underwater if they didn't collect.
Now imagine the deal with your friend was this: if Bitcoin goes up, and the investment profits, then you only get 30% of the profit and your friend gets 70%.
MSTR at a ~300% premium over their actual BTC holding last I checked, so the above is basically what is going on here.
I get wanting to buy Bitcoin on margin (super risky, high reward), but essentially giving MSTR a 3x premium for just doing it for you is pretty silly. If you want to buy BTC on margin, then... buy BTC on margin and keep 100% of the profits, not 30%.
November 27, 2024, 12:17:46 PM
First of all, thank you for explaining this idea about MicroStrategy bonds and stocks so well.
As for your question, of course I prefer to buy real Bitcoin and avoid buying MicroStrategy stocks or stocks in Bitcoin ETF companies as well.
The reason is clear and simple to me, these are centralized companies that hold Bitcoin centrally on behalf of users, and I prefer to hold Bitcoin in my own non-custodial wallet because I believe that the principle of Bitcoin is completely contrary to the concept of centralization.
What is the difference between these companies and central banks?
As for your question, of course I prefer to buy real Bitcoin and avoid buying MicroStrategy stocks or stocks in Bitcoin ETF companies as well.
The reason is clear and simple to me, these are centralized companies that hold Bitcoin centrally on behalf of users, and I prefer to hold Bitcoin in my own non-custodial wallet because I believe that the principle of Bitcoin is completely contrary to the concept of centralization.
What is the difference between these companies and central banks?
November 27, 2024, 11:49:56 AM
I understand it's just what happens with the stock market and it's probably pretty normal there, but I honestly don't feel comfortable about it. After all, it's the blowing of the real estate market out of proportion via stocks on companies, on debts, and other things which were removed pretty far at that point from the actual houses, that caused the 2008 economic crisis. When you buy Bitcoin, you invest in it directly, without any intermediaries. That feels safer to me. So I'm with the op on obtaining the real Bitcoin. Even though it seems to be a fair point that MicroStrategy's capitalization doesn't come solely from their Bitcoin activities.
November 27, 2024, 07:24:41 AM
MicroStrategy initially was a software company, they have really become a Bitcoin acquiring company, with their company valued based on their cryptocurrency holdings.
Well, they technically are still a software company, just that they have gotten very involved with Bitcoin that it now has a significant impact on MSTR shares valuation.For most traditional investors, the idea of a company which owns Bitcoin as an investment, and doesn't really produce much income, or hold assets that produce income, they would expect that the market capitalisation (value of all shares in circulation sold at current price), would be equal or close to the Net Asset Value (NAV), which is the value of all Bitcoin they hold.
How do you mean "doesn't really produce much income, or hold assets that produce income?"Market capitalization is mostly a reflection of market sentiments and isn't directly correlated with NAV.
Yes they are "technically" still a software company, but their company is well known for being a Bitcoin investment company. Most listed investment companies, or exchange traded funds, their market capitalisation is directly associated to their NAV.
When I say "doesn't really produce much income or hold assets that produce income", I mean that their primary growth has been due to their investment strategy, not their software sales. Their company has grown not because their software has generated them income (intellectual property or sales generating income), nor is it that they hold other assets which generate income, like stocks which pay dividends, it's purely capital gains of the underlying Bitcoin itself.
----------------------------------------
Why is it so difficult to understand what @Upgrade00 pointed out?
They are more then just a BTC holding company, they were before and are now a very successful software company with clients that include Visa and Pfizer and others.
Yes they are very bullish on BTC with deep investments in it.
But at the end of the day they are also still selling VERY expensive software to a bunch of fortune 500 companies.
Kind of like Boeing, their commercial aircraft are having some issues, their rockets are having some issues. Their military side doing just fine, their satellite (separate from their rockets) is just fine and so on.
MicroStrategy is more then BTC. So comparing their value to just their BTC holdings is pointless.
-Dave
In the financial year 2023 ending in 2024, MicroStrategy only had $0.465 billion in revenue, which is down 7.35% year on year for their software sales. Yes they're "technically" a software company. But their stock price isn't booming because of software sales. Their market capitalisation is more than 200x their total revenue, because of their ability to borrow money and use it to invest in Bitcoin. I disagree to compare their value to only Bitcoin, considering their revenue is only 0.5% of their total market capitalisation. They are more then just a BTC holding company, they were before and are now a very successful software company with clients that include Visa and Pfizer and others.
Yes they are very bullish on BTC with deep investments in it.
But at the end of the day they are also still selling VERY expensive software to a bunch of fortune 500 companies.
Kind of like Boeing, their commercial aircraft are having some issues, their rockets are having some issues. Their military side doing just fine, their satellite (separate from their rockets) is just fine and so on.
MicroStrategy is more then BTC. So comparing their value to just their BTC holdings is pointless.
-Dave
Reference: https://stockanalysis.com/stocks/mstr/revenue/
To all other comments in the thread, saying things like, Bitcoin is just their strategy in their background but their company is primarily sales, it's important to look at the actual data. They are not a software company anymore, their primary purpose is to acquire Bitcoin and exchange financial instruments of their stock to get more capital to acquire more Bitcoin. This is very different to them just buying Bitcoin with their excess capital.
November 27, 2024, 04:15:21 AM
If they hold more Bitcoin than their market value, it will make me surprised because it's not make sense.
But, if their market value is higher than their Bitcoin holdings, I don't see anything surprise.
This is the same thing like you wealth is $200K, your Bitcoin holdings is $50K, you have another $150K, but what's the problem or something wrong here? nothing.
But, if their market value is higher than their Bitcoin holdings, I don't see anything surprise.
This is the same thing like you wealth is $200K, your Bitcoin holdings is $50K, you have another $150K, but what's the problem or something wrong here? nothing.
November 27, 2024, 03:14:20 AM
Why is it so difficult to understand what @Upgrade00 pointed out?
They are more then just a BTC holding company, they were before and are now a very successful software company with clients that include Visa and Pfizer and others.
Yes they are very bullish on BTC with deep investments in it.
But at the end of the day they are also still selling VERY expensive software to a bunch of fortune 500 companies.
Kind of like Boeing, their commercial aircraft are having some issues, their rockets are having some issues. Their military side doing just fine, their satellite (separate from their rockets) is just fine and so on.
MicroStrategy is more then BTC. So comparing their value to just their BTC holdings is pointless.
-Dave
They are more then just a BTC holding company, they were before and are now a very successful software company with clients that include Visa and Pfizer and others.
Yes they are very bullish on BTC with deep investments in it.
But at the end of the day they are also still selling VERY expensive software to a bunch of fortune 500 companies.
Kind of like Boeing, their commercial aircraft are having some issues, their rockets are having some issues. Their military side doing just fine, their satellite (separate from their rockets) is just fine and so on.
MicroStrategy is more then BTC. So comparing their value to just their BTC holdings is pointless.
-Dave
They are like a typical enthusiast - they do have the main job (which is software, other products, and such) and they have their passion in the back ( which is BTC).
So I do agree with yours and @Upgrade00 point.
November 27, 2024, 01:43:30 AM
However, currently the market capitalisation of MSTR is $90.645 billion USD, whilst they hold 386,700 BTC Bitcoins worth $35.735 billion USD.
For most traditional investors, this doesn't really make any sense. They ask the question:
They must ask themselves couple of very basic questions.For most traditional investors, this doesn't really make any sense. They ask the question:
What is MicroStrategy?
What does MicroStrategy do?
Two basic questions can help them knowing that MicroStrategy is a company with many products and their investment into Bitcoin is not the only thing their company does.
So MicroStrategy marketcap must be bigger than their treasury part in Bitcoin, because they have other assets than Bitcoin.
The question is non sense .
November 27, 2024, 01:26:16 AM
MSTR success has now been tied with Bitcoin
That the common folk know them as nothing but a firm that continuously accumulate Bitcoin.
Now you can see MSTR without the word Bitcoin though this doesn't dispute the fact that they are still an AI computing company
While Saylor focuses on Bitcoin acquisation
Phong le is focused on the main purpose and administration of Bitcoin
Hence it not been quite popular since the CEO himself ain't as popular as saylor.
I think with its debt financed funding once Bitcoin undergoes correction the share is going to plummet like it did in March 2000
I won't be surprised if people start shorting the share at from 2026.
That the common folk know them as nothing but a firm that continuously accumulate Bitcoin.
Now you can see MSTR without the word Bitcoin though this doesn't dispute the fact that they are still an AI computing company
While Saylor focuses on Bitcoin acquisation
Phong le is focused on the main purpose and administration of Bitcoin
Hence it not been quite popular since the CEO himself ain't as popular as saylor.
I think with its debt financed funding once Bitcoin undergoes correction the share is going to plummet like it did in March 2000
I won't be surprised if people start shorting the share at from 2026.
November 26, 2024, 10:01:18 PM
Perhaps, perhaps not. They are a fully buzzword compliant business and are pushing hard in the AI market which lately has had the ability to drive up companies stock prices to ridiculous numbers.
I'm not saying that BTC has nothing to do with it, I'm just saying that a large amount of their value may come from the more traditional source of writing the hype of the next big thing.
So it could be really easy to take a look at their BTC holdings and say the company is worth X because of that and then look at it their new hyped AI products and have that add a ton of money to the stock price.
-Dave
I'm not saying that BTC has nothing to do with it, I'm just saying that a large amount of their value may come from the more traditional source of writing the hype of the next big thing.
So it could be really easy to take a look at their BTC holdings and say the company is worth X because of that and then look at it their new hyped AI products and have that add a ton of money to the stock price.
-Dave
November 26, 2024, 08:19:38 PM
Therefore I think it's correct to think of MSTR as basically a Bitcoin play, not anything to do with software.
No, I don't think we can simplify it that way. It is a software company with huge ties to bitcoin.By the way, what is a "Bitcoin play?"
There's no chance MSTR would be even at a fraction of it's $100B+ market cap if they were still just a plain old software company. They have done nothing that has justified 2x increase in their stock price, let alone 20x.
And by "Bitcoin play" I mean MSTR being a way for investors to expose themselves to Bitcoin's rise in price.
Put it another way, if Bitcoin fell in half in the next six months, MSTR would probably lose 95% of its value. (And Bitcoin would need quadruple in order for their assets to justify their market cap).
November 26, 2024, 06:00:34 PM
Most analysis I have seen seem to agree that 95% of MSTR's value is derived from their Bitcoin holdings and the promise to buy more, not their software business. Before they started buying Bitcoin, MSTR's market cap was something like $5B if I recall.
For you to properly factor in the impact of bitxoin in the rise, you'll have to do a control test with the trajectory of similar companies within that period of time. Most stocks in the S&P 500 have been on a sharp incline since around 2022. So many factors can be pointed out to be responsible for this, Bitcoin is not one of them.It's obvious that Bitcoin has had an impact on microstrategy valuation.
Therefore I think it's correct to think of MSTR as basically a Bitcoin play, not anything to do with software.
No, I don't think we can simplify it that way. It is a software company with huge ties to bitcoin.By the way, what is a "Bitcoin play?"
November 26, 2024, 05:43:42 PM
Why is it so difficult to understand what @Upgrade00 pointed out?
They are more then just a BTC holding company, they were before and are now a very successful software company with clients that include Visa and Pfizer and others.
Yes they are very bullish on BTC with deep investments in it.
But at the end of the day they are also still selling VERY expensive software to a bunch of fortune 500 companies.
Kind of like Boeing, their commercial aircraft are having some issues, their rockets are having some issues. Their military side doing just fine, their satellite (separate from their rockets) is just fine and so on.
MicroStrategy is more then BTC. So comparing their value to just their BTC holdings is pointless.
-Dave
They are more then just a BTC holding company, they were before and are now a very successful software company with clients that include Visa and Pfizer and others.
Yes they are very bullish on BTC with deep investments in it.
But at the end of the day they are also still selling VERY expensive software to a bunch of fortune 500 companies.
Kind of like Boeing, their commercial aircraft are having some issues, their rockets are having some issues. Their military side doing just fine, their satellite (separate from their rockets) is just fine and so on.
MicroStrategy is more then BTC. So comparing their value to just their BTC holdings is pointless.
-Dave
Most analysis I have seen seem to agree that 95% of MSTR's value is derived from their Bitcoin holdings and the promise to buy more, not their software business. Before they started buying Bitcoin, MSTR's market cap was something like $5B if I recall.
Therefore I think it's correct to think of MSTR as basically a Bitcoin play, not anything to do with software.
November 26, 2024, 05:37:10 PM
Why is it so difficult to understand what @Upgrade00 pointed out?
They are more then just a BTC holding company, they were before and are now a very successful software company with clients that include Visa and Pfizer and others.
Yes they are very bullish on BTC with deep investments in it.
But at the end of the day they are also still selling VERY expensive software to a bunch of fortune 500 companies.
Kind of like Boeing, their commercial aircraft are having some issues, their rockets are having some issues. Their military side doing just fine, their satellite (separate from their rockets) is just fine and so on.
MicroStrategy is more then BTC. So comparing their value to just their BTC holdings is pointless.
-Dave
They are more then just a BTC holding company, they were before and are now a very successful software company with clients that include Visa and Pfizer and others.
Yes they are very bullish on BTC with deep investments in it.
But at the end of the day they are also still selling VERY expensive software to a bunch of fortune 500 companies.
Kind of like Boeing, their commercial aircraft are having some issues, their rockets are having some issues. Their military side doing just fine, their satellite (separate from their rockets) is just fine and so on.
MicroStrategy is more then BTC. So comparing their value to just their BTC holdings is pointless.
-Dave
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