RE: MicroStrategy Rebrands To Strategy ₿
You are viewing a single comment's thread:
I disagree. I don’t have exact numbers for you, but from what I have learned so far they are very safe and won’t have to sell any bitcoin. They have been very strategic on when and what instruments to implement. Maturity dates for contracts are staggered and evn in worst case scenario they would have to only sell small amounts of bitcoin. I doubt they will, because they always sell stocks and raise more money.
The only negative th at may happen is MSTR stock prices will drop significantly if bitcoin experiences a bear market. Even if that happened, over time things would return to positive, just because that’s what bitcoin does.
I don’t think overleveraged applies here. There is no margin call.
MSTR investors are bitcoin investors, they understand the risks and are ok with it. I saw BlackRock now owns 5% of MSTR. Vanguard owns 7%, Morgan Stabley 4.5%, etc. I would assume they have doen their homework.
That said what Strategy does actually has the opposite effect of FTX. Strategy is a permanent top buyer, and investors keep giving them money to do so.
MicroStrategy is funding those buys with convertible debt so the ones buying those bond they can choose if they will get paid in stocks or cash when the bonds are mature so if the stock of MicroStrategy is low they will demand to get paid in cash MicroStrategy Revenue is 500 million annually and their debt 2 months ago when i made the research was 4.7 Billion dollars.
Debt to Equity Ratio was 111.6%
Market Cap to Revenue 210X
So MSTR basically an overleveraged bitcoin ETF because they bought their BTC with debt .
You can read more here
-@steemychicken1 I agree with @geekgirl on this one. Sorry :/
For the record I was a MSTR skeptic for a LONG time before it clicked for me.. and am now a long term holder of both MSTR as well as cold storage BTC.
Just because Strategy used debt to buy Bitcoin doesn’t automatically mean it’s overleveraged. whether it’s in a risky spot depends on factors like its debt structure, interest rates.. ability to make payments etc. The company has actually been pretty strategic, using convertible notes and other low-interest debt to fund purchases. Plus, not all of its Bitcoin buys were made with borrowed money .. Strategy has also used cash and equity sales, so its Bitcoin stash isn’t entirely built on debt.
In my opinion Strategy Is Not Overleveraged .. Here’s Why:
Bitcoin-Backed Strategy .. Not Reckless Borrowing
Strategy’s debt is tied directly to its Bitcoin holdings, which hve historically appreciated over time.. unlike companies drowning in high interest, unproductiv debt, MSTR’s leverage is strategic backed by a hard asset with asymmetric upside.
Long-Term Debt Structure .. Not Short-Term pressure
The majority of MSTR’s debt is in convertible notes with long dated maturities (some as far out as 2030). They aren’t scrmbling to refinance at high rates tomorrow .. This gives them time to capitalize on Bitcoin’s long term growth.
BTC Holdings Outpace debt Liabilities
As of recent filings, MSTR holds more Bitcoin than their total debt value at most reasonable price levels. Even in downturns, their BTC callateral vastly outweighs their loan obligations, reducing risk of liquidation.
michael Saylor’s “Not For Sale” Approach
unlike a typical overleveraged company .. that may be forced to liquidate assets under pressure .. Saylor’s strategy is built on never selling Bitcoin. This long-term conviction eliminates panic-driven deleveraging scenarios.
Revenue generating business Still Exists
MSTR is still a functioning enterprise software company (small but functining). While BTC is the headline, they have a legitimate revenue stream that provides operational flexibility, meaning they aren’t reliant on BTC price alone to cover obligations.
overleveraged companies buckle under debt they can’t manage. Strategy .. by contrast .. has structured its leverage around Bitcoin’s long-term appreciation, with patient debt maturities and a clear strategy. Volatility may create noise, but structurally, they aren’t in the danger zone.
— Not reckless, just playing the long game.. Like me.
BUT one has to stomach the big swings :) MSTR is NOT for everyone and I truly get that. Some days I even wonder why I take the risk.. but i do anyway.
( sorry for any spelling mishaps :D )
Also take my advice with a grain of salt.. I'm no financial expert .. I just like doing my DD and making risky investments.. After all Strategy is still a growth company, there is always risk, and "volatility is vitality"!! lol
Ok I understand what you are saying . But they have leveraged their stock price to issue more debt and they also constantly diluting their stock numbers issuing more stocks. If I am a creditor and the price of bitcoin drops below their average price being around 65000$ and with minimum revenue to cover the loans no one would convert into stocks everyone would ask for cash and the only way to generate that cash is by selling bitcoin . So if you think about it it’s like investing in an ETF but with higher premium than any other etf. Of course MicroStrategy will be tested in the upcoming bear market .
It will definitely be tested in the upcoming bear market.. and I am actually interested to see what happens.
When Strategy issues convertible debt, they’re borrowing money that Might turn into shares later, but not right away. Unlike issuing new stock (which immediately dilutes shareholders), convertible debt only dilutes if bondholders choose to convert .. usually at much higher stock prices.
Plus (when Strategy issues these bonds), they typically hedge with options to reduce dilution risk. But here’s the key part.. every time they issue more debt, they use it to buy more Bitcoin. So even if dilution happens down the road (when bond holders convert at the end of the term), there’s also more Bitcoin per share backing the stock. As long as Bitcoin's value rises over time, shareholders can actually end up better off despite any dilution.
BUT! One has to be a strong believer in BTC otherwise none of this matters. If that's the case then this is actually a brilliant stock to short. I don't blame anyone for that either.. heck, the stock jumps all over the place with big swings in either direction.