MSTR equity outpaces Bitcoin via financial engineering
The guest argued that holding MicroStrategy common stock (MSTR) remains an effective strategy to beat Bitcoin's performance due to the company's accretive equity issuance and leverage.
The argument
Despite dilution risks, the guest highlighted that MSTR has historically outperformed Bitcoin in fiat terms. This outperformance is driven by Michael Saylor's financial engineering, which uses preferred stock issuance to amplify Bitcoin exposure per share.
The thesis, stress-tested
✓ What validates it
- ✓MSTR continuing to show positive premium to Net Asset Value (NAV)
- ✓Accretive Bitcoin-per-share growth in upcoming quarterly reports
▸ Risks discussed
- ▸Counterparty risk of not owning the underlying Bitcoin directly
- ▸Added volatility compared to spot Bitcoin
- ▸Dilution from continuous at-the-market equity offerings
Hear it yourself
"They can continue stacking Bitcoin, stacking cash. I do think that they did make a misstep, when they used that cash reserve to pay off that $1,380,000,000 of convertible debt. So there's been a few missteps that strategy has made in my time as a shareholder, but, ultimately, I don't think there's anything existential. It's just the market wants an additional percentage point, the effective yields up, and then, the overall credit quality, I do think, will win out, and it doesn't help when Bitcoin's down 50%. And timing didn't help either because Bitcoin dropped, like, $23,000 in no time."
04:50
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE