The MSTR Advantage: According To Michael Saylor

Darntons

MSTR Overview:
MSTR Latest BTC Purchase:
MicroStrategy Investor Day Event:
ARK Invest On Future Adoption Of Bitcoin:
Overview Of MicroStrategy Financials:

MSTR Overview:

On December 16th of 2021, MicroStrategy held an Investor Day event, where CEO, Michael Saylor explained the case for MicroStrategy being the best available BTC investment vehicle. This article will review those declarations. Optimistic investors, such as ARK Invest mention how Bitcoin is the most secure asset out there, as the first global private decentralized money system ever invented. Cathie states that if you ask the individuals of El Salvador, you can see this evidently. Recently the President of El Salvador had a conversation with the President of Turkey: this is because Turkey is going through a currency crisis currently. This has led to speculation in regards to the possibility of further adoption of Bitcoin globally.

When MicroStrategy® Incorporated (Nasdaq: MSTR), led by Chairman and CEO Michael Saylor released their Q2 2020 financial results on July 28, 2020, they announced their capital allocation strategy: “With more than $500 million in cash and cash equivalents, MicroStrategy will seek to invest up to $250 million, which may include stocks, bonds, commodities such as gold, digital assets such as Bitcoin, or other asset types.”

Soon after, on August 11, 2020, MicroStrategy announced their first purchase of BTC (0.1% of Bitcoin’s entire supply) as a primary treasure reserve asset: “MicroStrategy, the largest independent publicly-traded business intelligence company, today announced that it has purchased 21,454 Bitcoin’s at an aggregate purchase price of $250 million.”

As stated by Michael Saylor: “There is an incredible need for a non-sovereign, store of value that will move at the speed of light on technology networks.”

MSTR Latest BTC Purchase:

On April 5, 2022, MicroStrategy Incorporated announced that, during the period between February 15, 2022 and April 4, 2022, through its wholly-owned subsidiary, MicroStrategy LLC, they have acquired approximately 4,167 supplemental Bitcoin’s.

MicroStrategy Investor Day Event

On December 16th, 2021, CEO, Michael Saylor made the following remarks regarding MSTR being a superior BTC investment vehicle in comparison to a Bitcoin ETF, a Bitcoin miner and the cryptocurrency itself. Saylor prides himself on the fact that MSTR has been a publicly traded company on the Nasdaq since 1998, and states that they are a seasoned security and a well-know entity, making it a simple on-ramp for investors looking for BTC exposure.

Furthermore, Saylor declares, as an operating company MicroStrategy can, generate cash flows and sweep those cash flows into Bitcoin, finance the cash flows at low cost of capital and exercise flexibility to pursue financing strategies or sell through volatility. Therefore, this leads to many reasons as to the advantage MSTR holds over alternative BTC investment vehicles. Namely, the fact that ETFs cannot borrow competitively nor generate a yield, Bitcoin miners and ETFs do not have a non-Bitcoin business value and the fact that the cryptocurrency itself is not regulated for institutions.

Saylor mentioned: “We only started with $500 million in capital and we invested $250 million and figured how to acquire billions of dollars of capital to buy Bitcoin with it. An ETF cannot borrow billions of dollars at a low interest rate. As an operating company we are unique in the world as a synthetic Bitcoin miner and operator.”

Saylor continues, “an ETF is simply a bucket of Bitcoin” in comparison, MSTR offers a non Bitcoin related business value being an enterprise software company which generates profits and uses cash flows and leverage on those cash flows to buy supplemental Bitcoin. As MSTR improves and increases leverage on their cash flows, supplemental Bitcoin will be purchased, Saylor declares.

Moreover, Saylor states the disadvantage that an investor creates when buying the cryptocurrency itself over MSTR, as they can borrow competitively: “If you buy 100 Bitcoin on an exchange, you don’t have the same ability to issue publicly traded debt or convertible debt to buy Bitcoin, so you’re not getting that access to the competitive fixed income markets.”

Time will tell how MicroStrategy’s hope in Bitcoin will play out. If their hope in BTC is truly founded, then Michael Saylor and his laser-eye focus will be remembered as one of the greatest thinkers and investors of all-time. If not, then it is almost certain that MSTR’s large Debt to Equity ratio will have disastrous consequences for the company and the shareholders.

What is debt-to-equity ratio?

The D/E ratio is an important metric used in corporate finance. It is a measure of the degree to which a company is financing its operations through debt versus wholly owned funds. More specifically, it reflects the ability of shareholder equity to cover all outstanding debts in the event of a business downturn.

ARK Invest On Future Adoption Of Bitcoin

Cathie Wood evidently mentioned the importance of Bitcoin, and her optimistic vision for the future adoption of the currency: ARKs research has suggested that with the way the electrical grid is evolving, we could see Bitcoin mining becoming part of that set infrastructure. Cathie believes that to mitigate duck curves, and to handle the overflow of energy within these grids, the use of Bitcoin mining could accelerate the shift towards renewables as the whole ecosystem becomes more profitable over time.

China banning mining of Bitcoin has been helpful in this regard, Cathie said. This is because the US has now become the major beneficiary of this change. Utility ecosystems are looking for new ways to profit, and Cathie believes that Bitcoin will be accelerating the shift towards renewables.

If these two trends occur, there is evident reason to assume that an investment within MSTR could become applicable. The question is, for more skeptical investors, if the adoption of Bitcoin fails – how does this impact the future of MicroStrategy.

Read the report on ARK Invest & Bitcoin here: https://darntons.com/2022/04/19/cathie-wood-exclusive-bitcoin-accelerating-renewable-energy-nft-importance-innovative-investing/

Overview Of MicroStrategy Financials:

A snapshot of MSTR’s financials (as of April 14th 2022):

– Market Cap = $5.13 billion

– Bitcoin Value = $5.17 billion (129,218 BTC x 40 K/BTC)

– Revenue (trailing 12 month) = $510 million

– EBITDA Margin (a measure of a company’s operating profit as a percentage of its revenue) = 11%

– Profit Margin = 82%

– Total Cash (sum of the cash flow from all activities including operating, investing and financing activities) = $63.3 million

– Total Debt = $2.24 billion

– Debt to Equity (depicts a company’s financial leverage, a measure of the degree to which a company is financing its operations through debt versus wholly owned funds) = 228%

– Institutional Ownership = 54%

– Float % (the shares available to be bought and sold by the general investing public) = 82%