MicroStrategy holds 461,000 Bitcoin and not 152,000 :)
They are doing this to be able to issue more and more shares in the future to buy Bitcoin. Whenever the Bitcoin/share ratio can be increased, it should be done. If the ratio cannot be increased, no new shares will be issued. In my view, this has nothing to do with the Bitcoin price, but with having long-term room for maneuver.
They are doing this to be able to issue more and more shares in the future to buy Bitcoin. Whenever the Bitcoin/share ratio can be increased, it should be done. If the ratio cannot be increased, no new shares will be issued. In my view, this has nothing to do with the Bitcoin price, but with having long-term room for maneuver.
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@stefan_21 Thank you very much. I fixed the error straight away. I am of the same opinion as you. I just found it interesting to see the current situation of MicroStrategy from a different, perhaps even more skeptical, point of view. I myself am invested in Micro with 70% of my portfolio and am still very convinced of Michael Saylor👍🏼's business philosophy
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•@der_Don I am quite critical of Microstrategy. If it goes wrong, it could do a lot of damage to Bitcoin in the short term. Adoption by companies would probably be set back by years and Bitcoin would plunge into a deep bear market for the time being.
In my opinion, it will be dangerous if the Bitcoin price falls to the point where MSTR is no longer trading at a premium to Bitcoin on the balance sheet, but at a discount. At that point, they would no longer be able to issue shares to buy Bitcoin in a meaningful way. Demand for convertible bonds would probably also collapse. And when the time comes for them to repay bonds, they could run into payment difficulties. Then they would actually be forced to sell Bitcoin and their promise/business model would be gone. This could then become a self-reinforcing cycle that causes the store to implode.
The fact that Saylor and MSTR have already successfully survived a bear market and the convertible bonds all have very long maturities speaks against this :)
In my opinion, it will be dangerous if the Bitcoin price falls to the point where MSTR is no longer trading at a premium to Bitcoin on the balance sheet, but at a discount. At that point, they would no longer be able to issue shares to buy Bitcoin in a meaningful way. Demand for convertible bonds would probably also collapse. And when the time comes for them to repay bonds, they could run into payment difficulties. Then they would actually be forced to sell Bitcoin and their promise/business model would be gone. This could then become a self-reinforcing cycle that causes the store to implode.
The fact that Saylor and MSTR have already successfully survived a bear market and the convertible bonds all have very long maturities speaks against this :)
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•@stefan_21 Are you invested in MSTR? And if so, with what goal?
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@stefan_21 and not forgetting a share split :) This also requires new shares to be issued. With a 10:1 split, we quickly reach 3 billion shares issued. Then the 10.3 billion possible shares don't seem so much anymore.
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•@der_Don I have added a small position to my portfolio. But it's not really relevant compared to my Bitcoin position :)
I'll just let it run its course and possibly sell it at some point and switch to Bitcoin.
I'll just let it run its course and possibly sell it at some point and switch to Bitcoin.
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@stefan_21 How high is the leverage or debt service? I thought the main source of financing is to issue new shares? How are they going to service the FC if BTC actually crashes? Because then selling BTC for liquidity would be the worst possible choice...I haven't looked at the numbers so I'm asking those in the community who are invested ;-)
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@Tokugawa They issue new shares if this enables them to increase the Bitcoin/share ratio. The investors play along with the game, as they have more Bitcoin per share afterwards than before. Otherwise, dilution would be bad for investors.
And then they issue long-term convertible bonds at very low interest rates. At the end of the term, the buyers of the bond then have the option of acquiring shares at a predetermined price (which of course makes sense if the current price > the fixed price) or reclaiming the borrowed money + interest.
Microstrategy assumes that the Bitcoin price will be higher 5 years in the future than it is today and that the share price will therefore be significantly higher (convertible bonds usually run for 5 years). If this is the case, they can easily service the bonds forever with newly issued shares, for example.
But will that work forever? To be honest, I can't imagine. I don't know exactly how many bonds they have currently issued. I'd have to look that up too :)
And then they issue long-term convertible bonds at very low interest rates. At the end of the term, the buyers of the bond then have the option of acquiring shares at a predetermined price (which of course makes sense if the current price > the fixed price) or reclaiming the borrowed money + interest.
Microstrategy assumes that the Bitcoin price will be higher 5 years in the future than it is today and that the share price will therefore be significantly higher (convertible bonds usually run for 5 years). If this is the case, they can easily service the bonds forever with newly issued shares, for example.
But will that work forever? To be honest, I can't imagine. I don't know exactly how many bonds they have currently issued. I'd have to look that up too :)
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