Michael Saylor bets on Bitcoin, while some institutions choose to bet on MicroStrategy stock.

Written by: Gregory Zuckerman

Translated by: Luffy, Foresight News

MicroStrategy CEO Michael Saylor

Michael Saylor's company has not launched any hot products or services. What he and MicroStrategy have done is issue new shares and bonds at a pace rarely seen in corporate history, then invest all the funds into Bitcoin, vowing to do so repeatedly.

Over the past year, MicroStrategy's stock price has risen by about 690%. The 59-year-old executive chairman holds about 10% of the company's shares, worth approximately $9.7 billion, in addition to personally holding about $1.9 billion worth of Bitcoin.

Saylor has become a public figure representing the recent Bitcoin craze, with nearly 4 million followers on the X platform (formerly Twitter). To celebrate Bitcoin's price surpassing $100,000, Saylor hosted a New Year's Eve party at his waterfront mansion in Miami, inviting hundreds of members of the cryptocurrency community, with his luxury yacht docked nearby. At the party, six dancers dressed in gold costumes performed. Celebrities and investment heavyweights gathered, including former Legg Mason fund manager Bill Miller, Fortress Investment Group chairman Peter Briger, and key portfolio manager Mark Casey from Capital Group. The event was live-streamed on YouTube to tens of thousands of Bitcoin enthusiasts, with Saylor hosting the party in a black suit jacket and a Bitcoin-themed T-shirt.

The enthusiasm for Saylor's company is so high that a puzzling situation has arisen: MicroStrategy holds about $47 billion worth of Bitcoin, but its stock market value has reached $97 billion. It's as if investors are spending $2 to buy a $1 bill. Equally surprising is that seasoned investors are among the biggest buyers, including the powerful mutual fund company Capital Group, which held about 8% of MicroStrategy as of September 30, and the Norwegian sovereign wealth fund Norges Bank Investment Management, which held nearly 1% of MicroStrategy.

Supporters say this premium reflects their belief that Saylor can continue to profit from his bets on Bitcoin. They believe that Bitcoin's total supply is capped at 21 million coins, and this scarcity will enhance its value. Richard Byworth, a partner at SYZ Capital who personally holds MicroStrategy stock, stated that Saylor is able to create value for shareholders while expanding MicroStrategy's Bitcoin reserves by issuing stock at high prices and selling bonds to the company on favorable terms.

"This premium is justified and will persist," said Jordi Visser, a Wall Street veteran who previously worked at Morgan Stanley and recently bought MicroStrategy stock. "No other company can do what he has done. They own about 2% of the Bitcoin supply; who else can own more?"

However, Saylor's strategy also comes with significant risks. He has experienced the ups and downs of investment waves, sometimes losing tens of billions of dollars in personal wealth in a single day when the wave peaks and then crashes.

Saylor declined to comment for this article.

Saylor has never married and will turn 60 next month. He has faced setbacks in his career and has had conflicts with financial regulators. Last year, he agreed to pay $40 million to settle an income tax dispute with Washington, D.C. officials, who claimed he actually resided in the district rather than in Florida or Virginia as he had claimed, and therefore should pay D.C. taxes.

Saylor's father was a career Air Force officer. Saylor studied aeronautics and science at MIT and participated in the Air Force Reserve Officer Training Corps. A few years after graduating, in 1989, he co-founded MicroStrategy in Tysons Corner, Virginia, with college friends, initially as a data mining software company.

During the late 1990s internet bubble, MicroStrategy rapidly rose. The stock Saylor held was worth about $10 billion, enough for him to throw lavish parties for employees and others, as well as organize Caribbean cruises. MicroStrategy also purchased domain names including Mike.com, Michael.com, Hope.com, and Voice.com, selling Voice.com for $30 million.

But everything collapsed when the internet bubble burst in 2000. As regulators scrutinized the industry's revenue recognition practices, MicroStrategy was forced to restate its revenues and earnings. This dramatic failure even caught the attention of tabloids: in March of that year, the New York Daily News ran a headline reading "Lost $6 Billion in a Day," accompanied by a photo of the then 35-year-old Saylor, looking sharp in a suit and tie, with a bewildered expression on his face.

Saylor has always been a public figure for Bitcoin, as seen in the above image of him speaking at a conference in 2023.

Later that year, Saylor, along with two other executives and the company, paid $11 million to settle accounting fraud charges brought by the SEC over the financial restatement. The SEC claimed the company had inflated its revenues and earnings, showing profits instead of losses, but Saylor and others neither admitted nor denied the charges.

By July 2002, MicroStrategy's stock closed at 45 cents, a significant drop from its 2000 high of $313, and the company faced debt issues.

During a lunch at a villa in Bridgehampton, New York, venture capitalist Rick Rickertsen expressed sympathy to Saylor and asked if he was worried about losing his company.

"Possibly," Saylor said, "but I would start over."

Saylor restructured MicroStrategy's debt and implemented a 10-for-1 reverse stock split, thus avoiding the crisis. For years, Saylor sought the next big opportunity. For a time, he made significant personal gains by investing in stocks like Google and Apple, but he dismissed Bitcoin, stating on Twitter in 2013 that Bitcoin "wouldn't last long."

By 2020, MicroStrategy's stock price had barely changed for years, with bleak growth prospects. The company's market value was only $1.5 billion, but it was still profitable and had about $500 million in cash.

During the COVID-19 pandemic in 2020, Saylor pondered how to handle the company's cash. Concerned that government spending to stabilize the economy could lead to inflation, Saylor re-examined Bitcoin and became a staunch supporter. Soon, he proposed to the board to use cash to buy Bitcoin, and the board agreed, mainly because the company seemed to have no better options. They believed that at least this move could attract some beneficial attention.

"The company was making no progress at the time, and there was almost no attention from Wall Street," Rickertsen said, who later became a board member, "the outlook was bleak."

That year, Saylor used half of the company's cash, about $250 million, to buy Bitcoin at around $11,000 each. He personally invested over $100 million. However, the price of Bitcoin soon fell to $9,000, resulting in a paper loss of about $40 million for MicroStrategy.

"Most of us on the board said, 'Oh my God, what have we done? We're going to get sued,'" Rickertsen said, "Saylor was worried too."

This panic did not last long. The price of Bitcoin began to rise, surpassing $26,000 by the end of 2020. MicroStrategy borrowed billions to buy more Bitcoin, including a $205 million floating-rate loan at an interest rate of 8.27%, which was a challenging loan condition at the time.

Then, at the end of 2022, the collapse of the cryptocurrency exchange FTX caused Bitcoin's price to drop below $17,000, and MicroStrategy's stock price also fell to about $17. The company's cost basis for Bitcoin was around $30,000, resulting in a paper loss. Rumors circulated that the company was in trouble. But Saylor and the company doubled down.

As Saylor intensified his strategy of buying Bitcoin through stock and bond sales, and as Bitcoin prices continued to rise, the company's stock price began to soar. According to Mark Palmer, an analyst at investment bank Benchmark Company, MicroStrategy raised $23.2 billion through stock and bond sales alone in 2024.

Saylor's promotional rhetoric may be somewhat repetitive and simplistic, but his belief in Bitcoin remains unwavering. He emphasizes that Bitcoin's supply is limited, which is different from the dollar and even gold. Saylor believes this makes Bitcoin perform better in resisting inflation. He also states that Bitcoin's digital nature allows its holders to store and use it more conveniently and at a lower cost, without intermediaries, making it a "revolutionary" form of currency.

Some mutual funds and other institutions have internal rules prohibiting the purchase of Bitcoin and Bitcoin ETFs, making MicroStrategy's stock an indirect way for them to bet on Bitcoin. Even some large conservative investors view the stock as a potential way to gain an advantage over competitors who are reluctant to venture into cryptocurrency.

It turns out that Saylor excels at creating different types of equity and debt investment products, such as bank loans, convertible bonds, common stock, and more, to ensure a steady flow of funds.

"His strength lies in creating different products for different audiences," said Brett Messing, an executive at SkyBridge Capital, which manages funds that heavily invest in Bitcoin and provides consulting services for a fund that holds MicroStrategy stock.

In the past month or so, Saylor has vigorously promoted MicroStrategy and Bitcoin on television shows, well-known podcasts, industry conferences, and other occasions. "If you don't buy Bitcoin at a high price, you're missing out on a money-making opportunity," he recently stated on Twitter.

"He is passionate in public and more detailed in private," said Matt Hougan, Chief Investment Officer of crypto asset management firm Bitwise, who heard Saylor speak at a dinner last summer attended by 12 investors. His company manages an ETF that holds MicroStrategy stock.

If Bitcoin prices continue to rise, the premium for holding MicroStrategy stock may persist. However, if Bitcoin prices plummet, MicroStrategy's stock price may also decline. Even if the premium disappears, as long as Bitcoin prices remain stable, its stock price may still be affected. Skeptics point out that some similar investment vehicles, such as closed-end funds, often trade at prices below the value of their underlying assets rather than at a premium.

However, the company may not face a survival crisis. MicroStrategy currently has $7.26 billion in unsecured debt, most of which was issued at very low interest rates. The company holds 450,000 Bitcoins, with an average cost of about $62,000. Only if Bitcoin prices fall below $16,000 and remain around that level when the debt matures will the value of the Bitcoins held by the company fall below its debt.

Just over a week ago, Saylor announced a brand new way for MicroStrategy to raise funds from investors to support its Bitcoin purchasing plan. He announced that the company would sell $2 billion in "perpetual preferred stock" this quarter. This news prompted analyst Palmer to reaffirm his target price of $650 for MicroStrategy stock, which is about 65% higher than the current stock price.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。