Five months with a floating profit of 300 million US dollars, the listed company MicroStrategy takes another 500 million bet on Bitcoin


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Author | Mark

“I will not sell Bitcoin, I will take 100 years.” In an interview with the media, Michael Saylor released this “cruel word”.

The bull market in 2020 is called “institutional bull” by investors. Institutional investors represented by Grayscale are buying crypto assets such as Bitcoin frantically, pushing the cryptocurrency market into a new high.

Among them are some listed companies, and MicroStrategy, a business analysis company whose CEO is Michael Saylor, is one of them.

Since the announcement of the entry of Bitcoin in July this year, the company has held more than 40,000 Bitcoins, with a floating profit of over US$300 million. Accompanied by the company’s share price rise, from more than 120 US dollars to a maximum of 358 US dollars.

On December 8, MicroStrategy also announced plans to issue US$400 million convertible senior bonds for Bitcoin investment.

And just tonight, MicroStrategy officially announced the details of the plan, the previous US$400 million was raised to US$550 million.

From the outside, MicroStrategy’s move is tantamount to a big bet on the future of Bitcoin.

“Extra 500 million, big bet on Bitcoin”

5个月浮盈3亿美元,上市公司MicroStrategy再拿5亿赌比特币 Michael Saylor publishes an article on the details of convertible bonds on Twitter

On December 8, MicroStrategy revealed to the outside world its plan to issue US$400 million convertible senior bonds, and stated that it plans to invest the net proceeds from the bond sale in Bitcoin.

Today, MicroStrategy officially announced the details of the plan.

The official said that it will formally issue convertible bonds worth 550 million U.S. dollars and use the net income from the issuance of the bonds to buy Bitcoin.

The official press release stated that these bonds will be issued to qualified institutions through private placement, and the issuance is expected to be completed on December 11. The convertible senior bond will mature on December 5, 2025.

MicroStrategy estimates that after excluding necessary expenses and discounts, the net proceeds of the offering are approximately $537.2 million.

Simply put, this kind of bond is equivalent to MicroStrategy borrowing money from investors. Investors can collect interest before maturity and get their principal back at maturity. If the company’s stock performs well during this period, investors can also request that the convertible notes be converted into company stock.

Based on the current Bitcoin price of $18,500, this more than $500 million will enable MicroStrategy to buy another 29,037 bitcoins.

It can be said that MicroStrategy wants to make a big bet by adding leverage, betting that the price of Bitcoin will continue to rise in the next 5 years.

Since 2020, institutions represented by Grayscale have become the focus of the cryptocurrency market. The identity of MicroStrategy’s listed companies and their betting on Bitcoin have also attracted much attention.

However, MicroStrategy does not belong to the field of cryptocurrency like Grayscale. It is a business intelligence company founded in 1989. Its main business is to provide software products to the B-side.

In July of this year, MicroStrategy began to buy Bitcoin. In August, it announced that it had purchased 21,454 BTC for $250 million. By the end of October, these two figures had become 425 million U.S. dollars and 38,250 Bitcoins, with an average cost of about 11,000 U.S. dollars.

On December 5th, Michael Saylor said on Twitter that the company has recently spent another 50 million US dollars to purchase 2,574 bitcoins at an average price of 19,427 US dollars. Currently the company holds 40,824 bitcoins, which are now worth about 742 million US dollars. .

“I bought Bitcoin for 600 million U.S. dollars, and I placed an order every 3 seconds and bought it for 14 days. I just sat there to pick up all the selling orders.” In an interview with the media, Michael Saylor described his purchase of Bitcoin. situation.

Of course, buying Bitcoin has also brought super rich returns to MicroStrategy.

According to public information, in the past 5 years, MicroStrategy’s main business net profit was only about 271 million US dollars, but in the 5 months of investing in Bitcoin, the highest profit has been 3.37 through Bitcoin investment. Billion US dollars, the current floating profit is about 268 million US dollars.

It can be said that five months have made money for the past five years.

“Why do listed companies fall in love with Bitcoin?”

5个月浮盈3亿美元,上市公司MicroStrategy再拿5亿赌比特币 Bitcoin holding data of listed companies such as MicroStrategy

According to statistics from Bitcoin Treasuries, there are currently more than 15 listed companies holding Bitcoin on the market.

Among them are Galaxy Digital Holdings, led by billionaire Mike Novogratz, with a total of 16,651 BTC, and Square, a payment company under the name of Twitter CEO Jack Dorsey, which holds a total of 4,709 BTC.

MicroStrategy is currently the company with the largest number of bitcoins.

Why does MicroStrategy favor Bitcoin?

Michael Saylor has publicly stated that the decision to invest in Bitcoin is driven by the current global economic and business conditions, but he has also considered future risks that may threaten his company’s financial plans.

In his view, Bitcoin is neither a currency nor a payment network, but a pure value storage tool, which is gold 2.0.

Since buying Bitcoin, Michael Saylor has become a staunch advocate of Bitcoin.

He even rated cryptocurrencies as the best store of value, far better than gold stocks. It is believed that Bitcoin has dominated, gold has become “an outdated method of storing value”, and Bitcoin is a million times better than it.

Recently, at a cryptocurrency investor forum jointly organized by Grayscale and Barron Group, Michael Saylor directly stated: “In the next decade, cryptocurrency will be dominated by institutions.”

Because of MicroStrategy’s massive purchase of Bitcoin, Michael Saylor successfully turned into an internet celebrity in the cryptocurrency field, and chatted with Binance founder CZ. Some opinions and thoughts about Bitcoin that are frequently published will also be widely spread by investors, and they will receive thousands of likes and reposts on Twitter every day.

In fact, MicroStrategy invests in Bitcoin, and Michael Saylor advocates that Bitcoin may have other more practical reasons.

Public data shows that since 2015, MicroStrategy’s operating profit has been declining. In 2015, the profit reached 134 million U.S. dollars. By 2019, it had dropped sharply to 3.981 million U.S. dollars. In 2019, it lost 1 million U.S. dollars.

5个月浮盈3亿美元,上市公司MicroStrategy再拿5亿赌比特币 MicroStrategy’s operating profit details in the past 5 years

The company’s traditional business development has been sluggish, and the business has contracted, but the bitcoin in front of it has risen sharply. As mentioned above, investing in Bitcoin, in just 5 months, the floating profit exceeds the total profit of the past five years.

May I ask, which listed company is not interested?

“Stock price skyrocketed, executives sold off”

As a listed company, its every move is naturally reflected in its stock price.

5个月浮盈3亿美元,上市公司MicroStrategy再拿5亿赌比特币 MicroStrategy stock movement

Since the announcement of its investment in Bitcoin in July, MicroStrategy’s stock price has not improved much. However, it began to increase in volume at the end of November and reached a new high of $358.94 in December, a five-month increase of 198%.

5个月浮盈3亿美元,上市公司MicroStrategy再拿5亿赌比特币 MicroStrategy’s net profit details in the past year

However, behind the rising stock price is not the support of the company’s main business, because according to MicroStrategy’s 2020 third-quarter financial report, its net profit loss reached 10.18 million US dollars.

5个月浮盈3亿美元,上市公司MicroStrategy再拿5亿赌比特币 Multiple organizations’ views on MicroStrategy stock

Obviously, the rise in the stock price is due to the move to invest in Bitcoin, and a large number of investors who follow the “good” have raised the stock price. Many institutions in the middle also gave a neutral and overweight assessment to MicroStrategy’s stock, believing that there is still upside potential.

However, recently, analysts at Citibank adjusted the previous “neutral” rating of MicroStrategy stock to “sell”, suggesting that its customers sell MicroStrategy stock.

According to analyst Tyler Radke, MicroStrategy CEO Michael Saylor’s “excessive focus” on Bitcoin puts investors at considerable risk.

Citibank told customers that the recent rise in MicroStrategy stock was “over-expansion,” and stated that its plan to raise $400 million through convertible bonds to buy bitcoin is aggressive and may be a means to disrupt transactions.

In addition, Citibank also revealed that the management of MicroStrategy recently sold stocks. In the past two months, stock sales have exceeded $50 million.

According to JPMorgan Chase, the largest share sale quota was executed by President Phong Lee, who sold almost all of his share.

On the one hand, the selling of stocks shows that the company’s executives took advantage of the stock price to cash in, and it may also indicate that the company’s executives do not support Michael Saylor’s crazy purchase of Bitcoin.

The sell-off of the stock market will naturally not affect investors in the cryptocurrency field. On the contrary, for the cryptocurrency field, the entry of listed companies like MicroStrategy has increased the exposure of Bitcoin and increased the demand.

But it must be acknowledged that the profit must be sold, and MicroStrategy may also become an “invisible bomb” in the cryptocurrency market in the future.

Take the $500 million bonds it plans to issue. If the price of Bitcoin drops sharply, MicroStrategy may repay the principal and interest of investors. This is also a hidden danger that MicroStrategy will leave after buying Bitcoin with convertible bonds.

Although Michael Saylor is now full of confidence, MicroStrategy, which entered the bull market, has not really seen the ups and downs and turbulence of the cryptocurrency market after all.

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