MicroStrategy leverage risks are highly overstated
The speaker argued that MicroStrategy is one of the most financially secure companies in the market despite concerns over its leverage.
The argument
The guest noted that MicroStrategy has only a 9% leverage ratio and holds over 30 years' worth of Bitcoin on its balance sheet to cover obligations, making bankruptcy fears unfounded.
The thesis, stress-tested
✓ What validates it
- ✓Continued timely dividend payments on preferred shares
- ✓Maintenance of leverage ratio below double digits in upcoming quarterly reports
▸ Risks discussed
- ▸Extreme downward volatility in Bitcoin price could pressure the leverage ratio
Hear it yourself
"And then we've got, $575,000,000 of perpetual preferred equity outstanding at 13%. So I think it's just a touch over $70,000,000 annual interest obligation, last last I checked. So, we on our balance sheet, not only do we have the 16,500 Bitcoin, but we also have twelve months of USD cash reserve and six months of SDRC reserve. That's our kind of first line of defense is how you could think of it for our flexibility of being able to pay out the dividends. And then we're in this process of constantly raising capital, whether that's through"
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