It's not that simple. "Overvalued because it's trading at a premium to NAV" - with this mindset, you would think that MicroStrategy is an obvious short.
However, there is a key detail that many have missed.
They issue convertible debt to buy more BTC.
Now this would not help the balance between the value of the share and the value of its bitcoin holdings, and if you hedge a short of MSTR by longing the appropriate amount of BTC, you would expect to capture this gap.
However, one crucial detail that everyone is overlooking:
Not only are the bonds he issues convertible by the bondholders into MSTR stock if the stock goes up a lot, but far more interestingly, if the stock goes another 30% higher than the strike price, then instead of the bonds converting, they become CALLABLE, Saylor can just redeem them at face value.
Not sure I agree with your numbers, but then I don't have an exposure so I don't really care too much. I dislike Michael Saylor - he is a fraud and a snake oil salesman. Just look at his history. I wouldn't invest in any company that he was running. If you are invested, good luck - you might need it. Please also read: https://rockandturner.substack.com/p/the-fiction-of-bitcoin-yield
It's not that simple. "Overvalued because it's trading at a premium to NAV" - with this mindset, you would think that MicroStrategy is an obvious short.
However, there is a key detail that many have missed.
They issue convertible debt to buy more BTC.
Now this would not help the balance between the value of the share and the value of its bitcoin holdings, and if you hedge a short of MSTR by longing the appropriate amount of BTC, you would expect to capture this gap.
However, one crucial detail that everyone is overlooking:
Not only are the bonds he issues convertible by the bondholders into MSTR stock if the stock goes up a lot, but far more interestingly, if the stock goes another 30% higher than the strike price, then instead of the bonds converting, they become CALLABLE, Saylor can just redeem them at face value.
I think this article explains their strategy quite well: https://cryptonarratives.substack.com/p/the-microstrategy-playbook-what-most
You would need BTC to trade at $15k for a long period of time for the company to get in trouble
Cheers
Not sure I agree with your numbers, but then I don't have an exposure so I don't really care too much. I dislike Michael Saylor - he is a fraud and a snake oil salesman. Just look at his history. I wouldn't invest in any company that he was running. If you are invested, good luck - you might need it. Please also read: https://rockandturner.substack.com/p/the-fiction-of-bitcoin-yield
You are 100% correct. The sky seems to be the limit with Crypto, AI, Cathie Wood, etc. Saylor could be the next Match King.