CryptoGrifts: I never understood what the hell the reason was why anybody should not take a look at MicroStrategy and run very far away from it very fast. I would not, however, say that the people running MicroStrategy are “desperate”—they, rather, see that the NAV the market is offering them is crazy, and want to exploit the incoming shareholders willing to buy at such valuations as much as possible as fast as possible by taking in their money as fast as they can, because they won’t stay crazy forever:
Craig Cobin: “If bitcoin is the future, what explains MicroStrategy’s need for speed?”: ‘Accelerating purchases, insider sales, and a rapidly evaporating premium…. The company has amassed over two per cent of all bitcoin in existence, funded through a combination of shares and convertible bonds… turned a humdrum business software firm into something akin to a bitcoin ETF… trading at a frothy premium to its net asset value…. Yet… while bitcoin has maintained its stratospheric altitude at around $100,000 per coin, MicroStrategy’s stock has drifted lower, shedding 40 per cent since peaking intraday on November 21 at $550…. Its premium to net asset value has meanwhile decreased from a high of 3.8 times to 1.9 times…. The company’s frenetic execution of its $21bn “at-the-money” equity offering…. According to JPMorgan analysts, MicroStrategy accounted for an astonishing 28 per cent of capital inflows into the cryptocurrency market in 2024…. Last Friday the company announced plans to raise up to $2bn in perpetual preferred stock this quarter to buy more bitcoin… just over a week after MicroStrategy said it was seeking shareholder approval to increase its share count by over 3000 per cent from 330mn to 10.33bn….. The company’s leadership recognises that the current NAV premium — the financial equivalent of finding money growing on trees — might not be permanent. There’s a hint of urgency (or desperation) in the air, an extreme haste to lock in this discrepancy between MicroStrategy’s stock and the bitcoin price before it is arbitraged away… <ft.com/content/e25e9938…>
