MicroStrategy Founder Michael Saylor recently stated in an interview with CNBC that MicroStrategy will undergo a brand transformation and position itself as a “Bitcoin development company.” He also reiterated his recommendation for investors to buy MicroStrategy stocks instead of Bitcoin, as MicroStrategy has also joined the AI trend.
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MicroStrategy rebrands as “Bitcoin development company”
Buy MicroStrategy stocks instead of Bitcoin
Acquiring 190,000 Bitcoin through financial operations
MicroStrategy’s recent stock performance
During the CNBC interview, Michael Saylor stated that it was a natural decision for MicroStrategy to reposition itself as a “Bitcoin development company” in order to reflect its strategy of accumulating more Bitcoin and promoting the growth of the Bitcoin network.
Saylor believes that Bitcoin is currently popular because it is “unrelated to traditional risk assets and does not involve any specific countries, companies, product cycles, or competitors, and is not affected by wars, weather, employees, or supply chains.”
According to Saylor, MicroStrategy’s model provides greater flexibility compared to investment trusts (ETFs). The company can develop software, generate cash flow, utilize the capital market, accumulate Bitcoin for its shareholders, and develop the Bitcoin network.
MicroStrategy has previously mentioned its advantages during its financial reports and recommended that investors buy MicroStrategy instead of Bitcoin.
Advantages include:
– Easy buying and selling (only requires a stock account)
– No additional fees (no gas fees for trading on the blockchain, no management fees for ETFs)
– Continuous increase in Bitcoin holdings (continuously buying Bitcoin using cash flow)
– Intelligent leverage (can use debt to buy Bitcoin)
– Downside protection (supported by MicroStrategy’s business intelligence expertise)
– Risk management (Bitcoin is attached to MicroStrategy, acting as a derivative product)
MicroStrategy entered the Bitcoin market as early as 2020. The company continuously bought Bitcoin using its own cash, debt, and newly issued stocks. It currently holds 190,000 Bitcoin, worth about $9.5 billion, which accounts for 80% of its stock market value (currently around $11.5 billion).
Most of the time, MicroStrategy issues new stocks through cash financing and then uses the cash to buy Bitcoin. Because MicroStrategy does not need to pay dividends to shareholders, the cost is naturally much lower than issuing debt. The chart below shows the cost of issuing new stocks by MicroStrategy since the third quarter of 2021, with costs ranging from $213 to $728 per share.
10x Research recently used a regression model to explore the correlation between MicroStrategy’s stock price and Bitcoin, and believes that when MicroStrategy is trading at a discount (according to its model, when MicroStrategy’s stock price is lower than Bitcoin), MicroStrategy may be a better investment choice than a Bitcoin ETF. However, when MicroStrategy experiences significant premiums, risk should be considered.
MicroStrategy’s stock price has recently surged alongside Bitcoin, reaching a high of $725, with a one-year return of 187%, far surpassing Bitcoin’s 127%.
10x Research
MicroStrategy
Bitcoin
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