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The article makes it sound like one needs an esoteric narrative to explain the premium to NAV that MSTR is currently trading at. That is not the case. MSTR has

The article makes it sound like one needs an esoteric narrative to explain the premium to NAV that MSTR is currently trading at. That is not the case. MSTR has a simple business: "Give us money, we invest it into Bitcoin for you and shield you from the downside. In return, we get some of the upside." As long as the Bitcoin price goes up, that is a viable business. How much it is worth depends on how many customers they will find in the future. It does NOT depend on their NAV. The premium to NAV simply reflects the market's valuation of their future business potential.

steveBK123 2y ago
> shield you from the downside How does Microstrategy shield anyone from downside?
- ArtTimeInvestor 2y ago
  Their deal is basically "After a set period, you receive your initial investment back. If Bitcoin's price has increased during this period, you can also chose to get shares in our company instead. That way you might get back more than you invested.". Since they had a sizeable amount of Bitcoin before they started this approach, in theory they might be able to repay all the lenders in full even if the Bitcoin price only declines from now on. Depending on the details of their behavior and the price movement. If Bitcoin's price declines rapidly and they fail to sell quickly enough, then they would go broke.
  - foobarqux 2y ago
    What are you talking about? The stock can go down so that isn’t guaranteed. The bonds can also go down if bitcoin goes down enough. The convertible bonds can go down for the same reasons.
    - BiteCode_dev 2y ago
      Basically I can't dee how investing in micro strategy is better than buying btc directly
      - qeternity 2y ago
        Because MSTR has two legs to the trade: BTC returns + NAV premium/discount. It is a better trade if the premium continues to rally. Otherwise it’s a worse trade.
        TZubiri 2y ago
        I think some boomers would prefer to invest in a company which holds btc, or fund, and pay a premium not to touch it directly. Premium goes to techies and lawyers and stuff.
        steveBK123 2y ago
        Overpaying because you expect less savvy people to overpay you more when you exit is not a sound investment thesis.
        TZubiri 2y ago
        Not less savvy, more savvy. Boomer does not know about bitcoin wallets. Engineer at MicroStrategy does.
        qeternity 2y ago
        There are numerous ETFs which hold BTC. This is not why money is flowing in to MSTR.
        steveBK123 2y ago
        So overpaying vs NAV because in hope the next greater fool with overpay NAV by even more. Nice.
      - deleted 2y ago
        [deleted]
itsalwaysgood 2y ago
Last paragraph sounds like a ponzi scheme.
- steveBK123 2y ago
  Because it is
  - latchkey 2y ago
    Because you said it is? Come on, let's have some more informed dialog than that. > As long as the Bitcoin price goes up, that is a viable business. He's been doing this for 4 years. The price has had some wild swings in that timeframe. He's sold one time (for tax loss harvesting) and bought right back in. Everything is tracked in public, because it is a public security. https://saylortracker.com/ https://saylortracker.com/ He's never sold because he had to. In that timeframe, bitcoin has also always gone up. It is higher than it was 4 years ago. He has stated in public that he won't ever sell, nor will he have to. So, what part of this is a ponzi scheme?
    - steveBK123 2y ago
      The duration of a ponzi does not change its status as a ponzi.
      - latchkey 2y ago
        What Saylor is doing does not fall within the definition of a ponzi. It is also happening in the most regulated public financial market out there. Again, what makes this a ponzi?
      - latchkey 2y ago
        Steve, if you're so confident that it is a ponzi, you should short it. https://www.msn.com/en-us/money/markets/microstrategy-mstr-bears-are-in-for-a-painful-short-squeeze-next-year/ar-AA1wtyML https://www.msn.com/en-us/money/markets/microstrategy-mstr-b...
noch 2y ago
> As long as the Bitcoin price goes up, that is a viable business. Okay, let's assume Bitcoin's price is going up forever, Laura. Right now, 16 years after Bitcoin was invented, that's a completely reasonable assumption. > How much it is worth depends on how many customers they will find in the future. It does NOT depend on their NAV. The premium to NAV simply reflects the market's valuation of their future business potential. Hold it! You're saying that the premium is saying that rational buyers are calculating that there'll be more customers for $MSTR or Microstrategy's convertible bonds in the future? So it's a ponzi? But is it a good ponzi or a bad ponzi? That is: where is value being created to be returned to investors who are ultimately left holding the bag?

steveBK123 2y ago

> shield you from the downside How does Microstrategy shield anyone from downside?

ArtTimeInvestor 2y ago
Their deal is basically "After a set period, you receive your initial investment back. If Bitcoin's price has increased during this period, you can also chose to get shares in our company instead. That way you might get back more than you invested.". Since they had a sizeable amount of Bitcoin before they started this approach, in theory they might be able to repay all the lenders in full even if the Bitcoin price only declines from now on. Depending on the details of their behavior and the price movement. If Bitcoin's price declines rapidly and they fail to sell quickly enough, then they would go broke.
- foobarqux 2y ago
  What are you talking about? The stock can go down so that isn’t guaranteed. The bonds can also go down if bitcoin goes down enough. The convertible bonds can go down for the same reasons.
  - BiteCode_dev 2y ago
    Basically I can't dee how investing in micro strategy is better than buying btc directly
    - qeternity 2y ago
      Because MSTR has two legs to the trade: BTC returns + NAV premium/discount. It is a better trade if the premium continues to rally. Otherwise it’s a worse trade.
      - TZubiri 2y ago
        I think some boomers would prefer to invest in a company which holds btc, or fund, and pay a premium not to touch it directly. Premium goes to techies and lawyers and stuff.
        steveBK123 2y ago
        Overpaying because you expect less savvy people to overpay you more when you exit is not a sound investment thesis.
        TZubiri 2y ago
        Not less savvy, more savvy. Boomer does not know about bitcoin wallets. Engineer at MicroStrategy does.
        qeternity 2y ago
        There are numerous ETFs which hold BTC. This is not why money is flowing in to MSTR.
      - steveBK123 2y ago
        So overpaying vs NAV because in hope the next greater fool with overpay NAV by even more. Nice.
    - deleted 2y ago
      [deleted]

itsalwaysgood 2y ago

Last paragraph sounds like a ponzi scheme.

steveBK123 2y ago
Because it is
- latchkey 2y ago
  Because you said it is? Come on, let's have some more informed dialog than that. > As long as the Bitcoin price goes up, that is a viable business. He's been doing this for 4 years. The price has had some wild swings in that timeframe. He's sold one time (for tax loss harvesting) and bought right back in. Everything is tracked in public, because it is a public security. https://saylortracker.com/ https://saylortracker.com/ He's never sold because he had to. In that timeframe, bitcoin has also always gone up. It is higher than it was 4 years ago. He has stated in public that he won't ever sell, nor will he have to. So, what part of this is a ponzi scheme?
  - steveBK123 2y ago
    The duration of a ponzi does not change its status as a ponzi.
    - latchkey 2y ago
      What Saylor is doing does not fall within the definition of a ponzi. It is also happening in the most regulated public financial market out there. Again, what makes this a ponzi?
    - latchkey 2y ago
      Steve, if you're so confident that it is a ponzi, you should short it. https://www.msn.com/en-us/money/markets/microstrategy-mstr-bears-are-in-for-a-painful-short-squeeze-next-year/ar-AA1wtyML https://www.msn.com/en-us/money/markets/microstrategy-mstr-b...

noch 2y ago

> As long as the Bitcoin price goes up, that is a viable business. Okay, let's assume Bitcoin's price is going up forever, Laura. Right now, 16 years after Bitcoin was invented, that's a completely reasonable assumption. > How much it is worth depends on how many customers they will find in the future. It does NOT depend on their NAV. The premium to NAV simply reflects the market's valuation of their future business potential. Hold it! You're saying that the premium is saying that rational buyers are calculating that there'll be more customers for $MSTR or Microstrategy's convertible bonds in the future? So it's a ponzi? But is it a good ponzi or a bad ponzi? That is: where is value being created to be returned to investors who are ultimately left holding the bag?