MicroStrategy’s Saylor Reaps a Stock Windfall During Bitcoin’s Record Run

(Bloomberg) — Michael Saylor’s decision to start buying Bitcoin in 2020 has paid off very positively for the co-founder and chairman of MicroStrategy Inc. this year.

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Saylor made about $400 million from a pre-planned daily sale of about 5,000 shares of the enterprise software company from January through last week, according to data compiled by Bloomberg. The share sales occurred following the exercise of options scheduled to expire in 2014. The stock has more than doubled this year to around $1,280, outpacing the original cryptocurrency’s record-breaking gains over the same period. At the end of 2014, MicroStrategy was trading at $160.

Shares of Virginia-based MicroStrategy outperformed Tysons Corner, which appears to allay investors’ concerns that controlling shareholder Saylor may be selling at the top. In a November conference call, Saylor stated that he had been paid a $1 salary for more than a decade and was not entitled to any cash bonuses. At the time, he said that exercising this option would allow him to purchase more Bitcoin for his own account in addition to meeting some obligations.

“I think this is a bigger story in the media than it is among investors,” said Lance Vitanza, managing director at TD Cowen, who has a “buy” recommendation on MicroStrategy. “Investors realize Saylor still owns a lot of stock.”

Even so, MicroStrategy’s premium over Bitcoin is starting to come into question following the January launch of US exchange-traded funds that can hold the cryptocurrency. In March, Kerrisdale Capital Management LLC said it was shorting the stock as it outpaced the rise in the price of the digital asset.

“To me, the big question is why buy MSTR on premium spot when you can just buy ETFs now?” MicroStrategy “PLTR is a retail magic faith stock like TSLA or GME,” said Austin Campbell, an assistant professor at Columbia Business School and consultant to blockchain firms. They tend to challenge fundamentals and trade purely on feelings. “This could go on for a while, if not forever.”

Meanwhile, investors are expected to turn their attention to MicroStrategy’s first-quarter results, which will be announced after regular stock market trading ends on Monday. Revenue is expected to remain steady around $122 million, according to analysts surveyed by Bloomberg. A net loss of 61 cents per share is expected. MicroStrategy’s net income in last year’s quarter was $461 million, helped by the tax benefit associated with its Bitcoin storage.

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The value of MicroStrategy’s Bitcoin holdings has risen to nearly $14 billion since the company began purchasing the digital asset as part of its inflation hedge.

Investors are likely more interested in learning when MicroStrategy will adopt an accounting rule that requires the digital asset to be valued at market prices. MicroStrategy has had to charge an impairment fee in the past to write down the value of Bitcoin when prices dropped, but failed to notice any increase. There is until 2025 for the change to be implemented.

This did not stop MicroStrategy from purchasing more Bitcoin. In March, the company sold two convertible notes. Spent more than $1 billion on Bitcoin in the first three months of 2024; This is more than half of last year’s total purchase.

“Saylor has a simple strategy for MSTR: sell equity/debt and buy BTC with the proceeds,” said Jeff Dorman, chief investment officer of digital asset management company Arca. “As BTC goes up, MSTR shares go up, so MSTR can sell more stocks/bonds and do it again.”

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