MSTR earnings got here out Might 1. My morning media stops final Thursday (right here and right here) requested for a preview. We do not speak about shares, so I deliberate to zoom out and hit themes. Whereas making ready, I needed to suppress the eye-roll reflexes that MSTR triggers.
MSTR, in fact, is the ticker image for MicroStrategy, or Technique, as the corporate is now identified. Technique, fronted by Michael Saylor, pioneered the “bitcoin treasury” mannequin that’s now been copied by Metaplanet and dozens of different firms. Technique plans to boost $84 billion, in keeping with its most up-to-date announcement, throughout fairness and glued revenue devices.
Listed below are three questions:
1. Earnings?
MSTR “earnings” and “price targets” are… Nicely, they do not actually imply the identical factor, particularly as soon as the impact of ASC 2023-08 is backed out. It is simply the worth of bitcoin and financing, plain and easy. Wall Avenue analysts and pundits ought to get that proper.
2. Technique?
You’ll be able to’t simply say, “Strategy.” You need to say, “Strategy; you know, it used to be Microstrategy.” Like Prince, Puff Daddy, Kanye West and Twitter. NB: of us say “strategy” (small “s”) quite a bit already.
3. Do not be a hater?
MSTR helps a market cap of $107b with bitcoin holdings of $53b and laser-eyed goodwill. No lifeboat, no parachute, no obvious Plan B. If it fails, the bitcoin market may take the blame.
Those eye-rollers (and a few obsequious media protection) however, we will agree that:
– The capital raises are really superior. The power is robust on this one.
– MSTR is up 36% on the yr, in comparison with lower than 5% for bitcoin. Who am I to throw stones?
– MSTR cleverly makes use of inventory value volatility as a function, not a bug, for 1) issuing mouth-watering converts, 2) attracting listed choices quantity, and three) company “yield” methods. (Simply please cease calling option-selling a “yield strategy.” And I stated “strategy” once more. Small “s”.)
– The preferreds (STRK and STRF) hit the mark with some of us who like preferreds. A few of my preferreds buddies are smitten.
MSTR created a motion
Technique (large “S”) has not solely created a motion, however a class. Levered MSTR ETFs (together with this new one which pays “income”) serve the marketplace for whom MSTR’s 70 vol is boring. Grayscale introduced an ETF that tracks 30 firms that maintain at the least 100 bitcoin.
Final, however not least, Cantor Fairness Companions, a SPAC, is merging to kind Twenty One Capital, which is able to maintain $3 billion of bitcoin. Point out this pattern in a room stuffed with pundits they usually’ll yell “Gamestop!” in unison. It is enjoyable.
That is all high-quality. Including bitcoin to the treasury of non-crypto firms* is an attention-grabbing pattern. (And that doesn’t embody crypto-native firms, like CoinDesk’s mother or father firm, Bullish.)
Nevertheless it’s solely bitcoin for the time being.
US (bitcoin) exceptionalism
Regardless of the loosening of U.S. regulatory zip-ties on digital property and the current flurry of ETF filings, bitcoin nonetheless dominates the dialog (it nonetheless accounts for about two-thirds of the entire cryptocurrency market).
Once more, that is high-quality if we’re speaking a couple of store-of-value asset contributing to a company treasury in any other case allotted to money and treasuries. Nonetheless, the rising variety of flavors of bitcoin exposure–leverage, yield, optionality, protection–are taking the place of training about what different blockchain property hope to ship, and why it is very important spend extra time occupied with the asset class.
Till just lately, that was fruitless for a lot of buyers and advisors, since brokerage- or futures- account implementation was not out there. (After all, it has been for ETH, however you want greater than ETH to consider the “digital asset class.” Lack of enthusiasm for ETH funding autos, we consider, has struggled partly because of this.)
If 2024 was bitcoin’s “coming out” yr, we hope that 2025 provides buyers and merchants alternatives to assume deeper and extra broadly, and to implement accordingly. If not, the U.S. crypto investing narrative will begin to sound like a “bitcoin maxi,” and that looks like leaving cash on the desk.
