MicroStrategy & Mega Nonsense
A meme-perspective on MSTR, "Corner of the FT" Analysis + a New Valuation Metric!
I was trying to avoid writing about MicroStrategy (ticker: MSTR), but given this is a Meme Situation in a Meme Market, I felt that this parody publication should step up and offer its own perspective.
First things first:
Bitcoin is an asset with noble characteristics, which serves a purpose. It can trade at $1m for all I know, this is not the point of this article…
Michael Saylor is a genius, this is not the point of this article…
Wall Street is run by a bunch of greedy little monkeys, this is the point of this article…
Glad I got this out of the way. Lets get to it…
42-Second Background
MSTR is run by Michael Saylor, a Bitcoin disciple, who is issuing shares and convertible bonds in order to buy moar and moar Bitcoin. He plans to issue $42bn of new paper, split evenly between $21bn in shares (through an At-the-Market ATM program) and $21bn in Convertible Bonds. If you are wondering on the significance of the $42bn number, here is the explanation given by MSTR’s CEO, Phong Le:
“The reason for that number is in part related to the science fiction series The Hitchhiker’s Guide to the Galaxy where a supercomputer calculates the answer to the question of life, the universe and everything as the number 42..We believe it’s a unique number with some special characteristics. It’s the sum of 21 plus 21…We all know that 21 is a magic — a magical number in the world of Bitcoin. There can only ever be a maximum of 21 million Bitcoin in circulation.”
As a fan of Hitchhiker’s Guide to the Galaxy, I applaud such reference...
The Meme Setup
Thanks to Wall Street’s insatiable demand for Bitcoin-like exposure, MSTR now trades at 2.5-3.0x its Net Asset Value.
This isn’t just a little company. MSTR now has a $100bn market cap.
Just pause and think for a second:
Investors can buy Bitcoin today through very liquid ETFs…
…yet they choose to buy shares in a $100bn company, paying a 150-200% premium to the value of the Bitcoin it holds…
Efficient Markets innit…
Here’s how the NAV progressed over time (h/t MSTR tracker). One can see that the premium to NAV exploded during the last few months
Sensibility doesn’t Pay!
It’s not like it pays to be sensible though. If one had bought MSTR instead of Bitcoin at the beginning of the year, they’d be up +500% vs Bitcoin +130%
Visualization of Stupid
There are a couple of ways to visualize how stupid this all is.