MSTR earnings got here out Might 1. My morning media stops final Thursday (right here and right here) requested for a preview. We do not speak about shares, so I deliberate to zoom out and hit themes. Whereas making ready, I needed to suppress the eye-roll reflexes that MSTR triggers.
MSTR, in fact, is the ticker image for MicroStrategy, or Technique, as the corporate is now identified. Technique, fronted by Michael Saylor, pioneered the “bitcoin treasury” mannequin that’s now been copied by Metaplanet and dozens of different corporations. Technique plans to boost $84 billion, in accordance with its most up-to-date announcement, throughout fairness and stuck revenue devices.
Listed here are three questions:
1. Earnings?
MSTR “earnings” and “worth targets” are… Effectively, they do not actually imply the identical factor, particularly as soon as the impact of ASC 2023-08 is backed out. It is simply the worth of bitcoin and financing, plain and easy. Wall Road analysts and pundits ought to get that proper.
2. Technique?
You’ll be able to’t simply say, “Technique.” You need to say, “Technique; you already know, it was once Microstrategy.” Like Prince, Puff Daddy, Kanye West and Twitter. NB: people say “technique” (small “s”) lots already.
3. Do not be a hater?
MSTR helps a market cap of $107b with bitcoin holdings of $53b and laser-eyed goodwill. No lifeboat, no parachute, no obvious Plan B. If it fails, the bitcoin market may take the blame.
These eye-rollers (and a few obsequious media protection) however, we will agree that:
– The capital raises are actually superior. The power is robust on this one.
– MSTR is up 36% on the yr, in comparison with lower than 5% for bitcoin. Who am I to throw stones?
– MSTR cleverly makes use of inventory worth volatility as a characteristic, not a bug, for 1) issuing mouth-watering converts, 2) attracting listed choices quantity, and three) company “yield” methods. (Simply please cease calling option-selling a “yield technique.” And I stated “technique” once more. Small “s”.)
– The preferreds (STRK and STRF) hit the mark with some people who like preferreds. A few of my preferreds associates are smitten.
MSTR created a motion
Technique (large “S”) has not solely created a motion, however a class. Levered MSTR ETFs (together with this new one which pays “revenue”) serve the marketplace for whom MSTR’s 70 vol is boring. Grayscale introduced an ETF that tracks 30 corporations that maintain not less than 100 bitcoin.
Final, however not least, Cantor Fairness Companions, a SPAC, is merging to type Twenty One Capital, which can maintain $3 billion of bitcoin. Point out this development in a room stuffed with pundits and so they’ll yell “Gamestop!” in unison. It is enjoyable.
That is all superb. Including bitcoin to the treasury of non-crypto corporations* is an attention-grabbing development. (And that doesn’t embody crypto-native corporations, like CoinDesk’s father or mother firm, Bullish.)
However it’s solely bitcoin in the mean time.
US (bitcoin) exceptionalism
Regardless of the loosening of U.S. regulatory zip-ties on digital belongings and the latest flurry of ETF filings, bitcoin nonetheless dominates the dialog (it nonetheless accounts for about two-thirds of the whole cryptocurrency market).
Once more, that is superb if we’re speaking a few store-of-value asset contributing to a company treasury in any other case allotted to money and treasuries. Nevertheless, the rising variety of flavors of bitcoin exposure–leverage, yield, optionality, protection–are taking the place of schooling about what different blockchain belongings hope to ship, and why it is very important spend extra time fascinated with the asset class.
Till just lately, that was fruitless for a lot of buyers and advisors, since brokerage- or futures- account implementation was not out there. (In fact, it has been for ETH, however you want greater than ETH to consider the “digital asset class.” Lack of enthusiasm for ETH funding autos, we imagine, has struggled partially for that reason.)
If 2024 was bitcoin’s “popping out” yr, we hope that 2025 offers buyers and merchants alternatives to suppose deeper and extra broadly, and to implement accordingly. If not, the U.S. crypto investing narrative will begin to sound like a “bitcoin maxi,” and that looks like leaving cash on the desk.
