As Michael Saylor piles dividend and curiosity obligations onto MicroStrategy (MSTR) with a purpose to purchase bitcoin (BTC), doubts about his technique are rising.
The inventory is buying and selling at half the three.4X BTC premium it loved as lately as November 20, and social media is buzzing about whether or not the corporate truly possesses all its BTC.
Already, shareholders are calling for proof of reserves, nonetheless, throughout a Bitcoin 2025 speak, Saylor claimed that the “current conventional way” to publish them is insecure and “dilutes the security” of custodians, exchanges, and traders.
At the moment, MicroStrategy is buying and selling at a 65% premium to the worth of its BTC holdings. That 1.65 multiple-to-net asset worth or mNAV is a well-liked albeit imprecise valuation for publicly-traded BTC treasury corporations like MicroStrategy.
Technically talking, public corporations don’t have any internet asset worth per se, and mNAV merely divides the corporate’s market capitalization by the worth of its BTC holdings with no regard for debt or different obligations.
In different phrases, that mNAV is above one within the first place is as curious as it’s outstanding.
Funded by billions of {dollars} price of dilutive inventory choices, convertible debt, and dividend-yielding most well-liked shares, MicroStrategy has amassed over $60 billion price of BTC — quadruple the worth it held 12 months in the past.
Certainly, as BTC has rallied to new highs, Saylor’s leveraged commerce has profited spectacularly. At $107,000 per BTC this previous weekend versus MicroStrategy’s price foundation of simply $69,726, the corporate has unrealized revenue exceeding $20 billion.
The persistence of MicroStrategy’s premium
Profitability doesn’t appear to be the issue. As an alternative, the query on most traders’ minds is the worth trajectory of BTC itself — and whether or not Saylor can proceed to promote low cost debt and preserve traders enthusiastic amid a raft of latest competitors.
Already this yr, rivals like Twenty One, Nakamoto, MetaPlanet, Semler, KULR, Blockchain Group, Aker, Attempt, Nuvve, and lots of different publicly-traded corporations have raised capital to purchase BTC and compete with Saylor.
Skeptics of Saylor’s “dilutive accretion” — promoting shares to boost {dollars} for BTC purchases — embody famed short-seller Jim Chanos. The ex-Kynikos funding supervisor believes MicroStrategy is “ridiculously” overvalued relative to its BTC holdings.
MicroStrategy additionally has curiosity and dividend obligations. The corporate already has $8.2 billion in notional debt requiring a mean of $34.6 million in annual curiosity funds, even on the comparatively modest rate of interest of 0.42%.
Skeptics have additionally known as metrics like bitcoin yield per share “made up” because it typically conveys how a lot mNAV the corporate has captured from pre-existing shareholders. Certainly, mNAV advantages shareholders earlier than the corporate’s dilutive share gross sales seize it to remodel it into the bitcoin yield per share metric.
Learn extra: MicroStrategy wannabes and the return of mNAV mania
Undeterred, Michael Saylor continues shopping for
Nonetheless, these critiques haven’t dampened Saylor’s enthusiasm. Certainly, he reaffirmed his choice for BTC over fiat and even joked about promoting enamel to carry on — a clapback on the Monetary Instances for analogizing BTC shortage to the shortage of human physique components.
Like each firm that makes use of monetary leverage to amass BTC, MicroStrategy is taking harmful dangers with different folks’s cash. Its listing of statutory threat disclosures spans 28 pages on its newest quarterly submitting.
With a excessive ratio of market cap to its BTC and new rivals getting into the market, some traders are including warning.
Nonetheless, a loyal fan base of traders continues to consider MicroStrategy will earn a renewed premium from the world’s largest corporately-owned pile of BTC and appeal to new inflows of investor confidence.
In spite of everything, the inventory has definitely outperformed BTC in current reminiscence. During the last 5 years, BTC is up 1,100%, whereas MSTR is up 2,900% over the identical interval.
Received a tip? Ship us an e mail securely by way of Protos Leaks. For extra knowledgeable information, observe us on X, Bluesky, and Google Information, or subscribe to our YouTube channel.