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At today's price, MSTR owns about $14B of Bitcoin and has a market cap of almost $30B. Has anyone here actually used MicroStrategy, the product/service offerin

by paulgb 3y ago

At today's price, MSTR owns about $14B of Bitcoin and has a market cap of almost $30B. Has anyone here actually used MicroStrategy, the product/service offering? Is the software company behind it worth the implied $16B, or is MSTR essentially just a Bitcoin ETF with a really bad fee ratio? (I’m not even counting the $2B debt on their books) Would I be dumb to do a long BTC / short MSTR pair trade?

paulpauper 3y ago
Would I be dumb to do a long BTC / short MSTR pair trade? yes because one of the legs can have unbounded losses
- jpk 3y ago
  I think you're taking the question too literally. One can surely make the bet that two securities will move in opposite directions, with bounded loss potential, using things like option spreads.
arcticbull 3y ago
MSTR has had declining nominal revenue (let alone real-dollar) basically every quarter since 2014. [1] Remember too that Saylor popped the 1999 tech bubble when he was accused by the SEC of cooking the MicroStrategy company books. Settled for millions dollars in fines, and should have at that point been banned from ever running a public company, but hey, this is America. When they restated their books, he lost more money in a single day than anyone in history. [2] Not sure he's really someone to be taken seriously. He's shown some questionable judgement, to put it mildly. Desperation will do that to you. [1] https://www.macrotrends.net/stocks/charts/MSTR/microstrategy/revenue https://www.macrotrends.net/stocks/charts/MSTR/microstrategy... [2] https://www.nytimes.com/2000/12/15/business/microstrategy-chairman-accused-of-fraud-by-sec.html https://www.nytimes.com/2000/12/15/business/microstrategy-ch...
deleted 3y ago
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xiphias2 3y ago
Accoding to the CEO (Michael Saylor) most of the price premium comes from institutions like pension funds not being allowed to directly hold BTC, but they are allowed to a ratio of the money in stocks. At the same time they need exposure to BTC as an independent asset that performs well (funds have performance mandates). Of course now that spot ETF is approved it changes the picture somewhat, but it looks like MSTR is still needed as an institutional vehicle for wrapping BTC.

by paulgb 3y ago

paulpauper 3y ago

Would I be dumb to do a long BTC / short MSTR pair trade? yes because one of the legs can have unbounded losses

jpk 3y ago
I think you're taking the question too literally. One can surely make the bet that two securities will move in opposite directions, with bounded loss potential, using things like option spreads.

arcticbull 3y ago

MSTR has had declining nominal revenue (let alone real-dollar) basically every quarter since 2014. [1] Remember too that Saylor popped the 1999 tech bubble when he was accused by the SEC of cooking the MicroStrategy company books. Settled for millions dollars in fines, and should have at that point been banned from ever running a public company, but hey, this is America. When they restated their books, he lost more money in a single day than anyone in history. [2] Not sure he's really someone to be taken seriously. He's shown some questionable judgement, to put it mildly. Desperation will do that to you. [1] https://www.macrotrends.net/stocks/charts/MSTR/microstrategy/revenue https://www.macrotrends.net/stocks/charts/MSTR/microstrategy... [2] https://www.nytimes.com/2000/12/15/business/microstrategy-chairman-accused-of-fraud-by-sec.html https://www.nytimes.com/2000/12/15/business/microstrategy-ch...

deleted 3y ago

[deleted]

xiphias2 3y ago

Accoding to the CEO (Michael Saylor) most of the price premium comes from institutions like pension funds not being allowed to directly hold BTC, but they are allowed to a ratio of the money in stocks. At the same time they need exposure to BTC as an independent asset that performs well (funds have performance mandates). Of course now that spot ETF is approved it changes the picture somewhat, but it looks like MSTR is still needed as an institutional vehicle for wrapping BTC.