Michael Saylor, the founder and Chairman of MicroStrategy, has experienced a mix of successes and challenges over the past quarter-century. Initially, the bursting of the dotcom bubble in 2000 resulted in a significant decline of 99% in the company’s stock value. In 2022, Bitcoin, a substantial portion of MicroStrategy’s financial holdings, experienced a drastic decrease of over 70% from its all-time high in November.
However, during March 2024, MicroStrategy (MSTR) experienced an astonishing 461.7% surge in stock price over the previous year. In spite of the various tumultuous occurrences, MicroStrategy has proven to be a triumph for its investors.
Who Is the Owner of Microstrategy?
MicroStrategy Inc. specializes in the creation and provision of cutting-edge enterprise analytics and mobility software. Their impressive portfolio includes the highly acclaimed MicroStrategy Analytics platform and the powerful MicroStrategy Server. The company earns money by entering into licensing agreements, offering cloud-based subscriptions, and providing associated services connected to its platform.
Saylor holds the most significant stake in MicroStrategy, with Class B shares valued at over $2 billion, giving him a substantial 68% voting control. Capital Research and Management Company and The Vanguard Group, Inc. hold significant stakes as the second and third largest shareholders.
Despite selling 400,000 voting shares between December and April, Saylor’s ownership has remained relatively high.
Huge Gamble
The core of Saylor’s approach as chairman at MicroStrategy is to utilize affordable debt to generate significant capital. Thanks to the incredibly low-interest rates, the company is able to access capital at a very affordable rate, which greatly enhances the impact of its investments.
MicroStrategy creatively uses its stock (MSTR) to repay debts instead of using cash, providing lenders with an attractive premium above the stock’s initial price. This strategy is advantageous for MicroStrategy and ensures that lenders’ interests are in line with the company’s.
In 2020, Saylor made a calculated move to safeguard against currency devaluation by allocating MicroStrategy’s excess funds into Bitcoin. During that period, MicroStrategy managed to secure an impressive $3.4 billion through a range of financial instruments in order to acquire Bitcoin. This resulted in a total of $4 billion being spent on purchasing the cryptocurrency, with the prices steadily rising.
The concept revolves around MicroStrategy’s ability to settle its traditional debt in the future by reducing its Bitcoin holdings, capitalizing on Bitcoin’s potential as a reliable asset with significant long-term value growth. In a tweet from October 2020, Saylor disclosed that he personally possessed 17,732 BTC valued at $250 million. It can be reasonably inferred that he has obtained additional possessions since then.
Strategic Plan for the Future
Over the last four years, MicroStrategy has managed to accumulate an impressive amount of 214,246 BTC, accounting for approximately 1.02% of the total supply. During its most recent acquisition spree, the company initiated the purchase of Bitcoin in the latter part of December 2023, just before the onset of the recent surge in value.
According to the SEC filings, the company invested $155.4 million in buying 3,000 BTC between Feb. 15 and 25. An extra 9,000 tokens were acquired for a total of $623 million in convertible notes during the period from March 11 to March 18.
According to data compiled by Bloomberg, MicroStrategy has utilized a significant portion of its Bitcoin acquisitions in 2024, with an average cost that is more than double the average price of the previous year.
Currently, the software company possesses a staggering 214,246 BTC, with a value exceeding $14 billion. This impressive amount represents approximately 1% of the total moving BTC supply. MicroStrategy has held the most significant amount of Bitcoin among publicly traded businesses for a considerable period. Nevertheless, in recent developments, BlackRock has outpaced MicroStrategy’s holdings with its iShares Bitcoin ETF (IBIT).
It has come to light that BlackRock and Fidelity together possess 428,304 BTC, which amounts to a staggering $27.7 billion, through their spot Bitcoin ETFs. These ETFs possess an additional 214,058 Bitcoins in comparison to MicroStrategy.
How Effective Is the Plan over time?
MicroStrategy’s purchase of BTC at an average price of $31,554 has led to a current market value exceeding $13 billion, showcasing a significant return on its initial investment.
From April 2019 to the present, the prices of BTC have experienced a remarkable increase, soaring from $5,170 to approximately $66,500. In the past five years, the stock of MicroStrategy (MSTR) has delivered an impressive return of 910%, surpassing the overall market performance by a significant margin.
Despite a recent pullback in MicroStrategy shares, the stock has experienced a significant increase of over 90% this year, building on an impressive 346% surge in 2023.
Nevertheless, the company’s stock price does not reflect its business performance. In 2023, MicroStrategy’s business yielded close to $496 million in revenue, with the operating income amounting to a mere $800,000, a significant decrease from the $11 million recorded in 2022.
Conclusion
In general, investors will be pleased with any successful business model. Saylor’s innovative incorporation of Bitcoin into business funds has set MicroStrategy up for long-term prosperity and paved the path for other companies to emulate. This approach has shown the possibility of Bitcoin acting as a reliable asset and has influenced broader acceptance in the business world.
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