Original author: Gregory Zuckerman
Original translation: Luffy, Foresight News
Michael Saylor, CEO, MicroStrategy
Michael Saylor’s company didn’t launch any hit products or services. What he and MicroStrategy did do was sell new shares and bonds at a pace rarely seen in corporate history, then plow all that money into Bitcoin, vowing to do it over and over again.
MicroStrategys stock price has risen about 690% over the past year. The 59-year-old executive chairman holds about 10% of the companys shares, worth about $9.7 billion, in addition to his personal holdings of about $1.9 billion worth of Bitcoin.
Saylor has become the public face of the recent bitcoin craze, with nearly 4 million followers on X-Platform (formerly Twitter). To celebrate bitcoin’s $100,000 price, Saylor hosted a New Year’s Eve party for hundreds of members of the cryptocurrency community at his Miami beachfront mansion, where his luxury yacht was docked nearby. Six dancers in gold costumes danced. Celebrities and investment heavyweights gathered, including former Legg Mason fund manager Bill Miller, Fortress Investment Group Chairman Peter Briger, and Capital Group’s key portfolio manager Mark Casey. The event was live-streamed to tens of thousands of bitcoin enthusiasts via YouTube, with Saylor hosting the party in a black blazer and a bitcoin-themed T-shirt.
Enthusiasm for Saylor’s company has been so high that it’s a puzzling situation: MicroStrategy holds about $47 billion worth of Bitcoin, but its stock market value is $97 billion. It’s as if investors were paying $2 for a $1 bill. Also surprising: Sophisticated investors were among the biggest buyers, including Capital Group, a powerful mutual fund company, which owned about 8% of MicroStrategy as of Sept. 30, and Norges Bank Investment Management, the Norwegian sovereign wealth fund with $1.5 trillion in assets under management, which owns nearly 1% of MicroStrategy.
Fans say the premium reflects their belief that Saylor can continue to profit from his bets on Bitcoin. They believe that the total number of Bitcoins is limited to 21 million, and this scarcity will increase its value. SYZ Capital partner Richard Byworth, who personally owns MicroStrategy shares, said that Saylor can create value for shareholders while expanding MicroStrategys Bitcoin reserves by issuing shares at high prices and selling bonds to the company on favorable terms.
“The premium is justified and it’s here to stay,” said Jordi Visser, a Wall Street veteran who formerly worked at Morgan Stanley and recently bought MicroStrategy shares. “No other company can do what he does. They own about 2% of the bitcoin supply. Who else owns more?”
Saylor’s strategy, however, comes with huge risks. He has ridden investment waves only to see them crest and crash, sometimes losing billions of dollars of personal wealth in a single day.
Saylor declined to comment for this article.
Saylor, who never married and turns 60 next month, has had his share of setbacks in his career and run-ins with financial regulators and others. Last year, he agreed to pay $40 million to Washington, D.C., to settle an income tax dispute after officials there said he actually lived in the District, not Florida or Virginia as he claimed, and should pay the District’s taxes.
Saylor’s father was a career Air Force officer. Saylor studied aeronautics and science at MIT and joined the Air Force ROTC. A few years after graduation, he founded MicroStrategy in Tysons Corner, Va., in 1989 with college friends as a data mining software company.
MicroStrategy rose rapidly during the dot-com bubble of the late 1990s. Saylor’s stock holdings were worth about $10 billion, enough to host lavish parties for employees and others and organize Caribbean cruises. MicroStrategy also bought domain names including Mike.com, Michael.com, Hope.com and Voice.com, and sold Voice.com for $30 million.
But everything came crashing down in 2000 when the dot-com bubble burst. MicroStrategy was forced to restate its revenue and earnings as regulators scrutinized how the industry booked revenue. The fiasco was dramatic enough to attract tabloid attention: In March of that year, the New York Daily News ran a headline titled “$6 billion lost in one day,” with a photo of Saylor, then 35, dapper in a suit and tie, with a blank look on his face.
Saylor has been a public figure for Bitcoin, speaking at a conference in 2023.
Later that year, Saylor, two other executives and the company paid $11 million to settle accounting fraud charges brought by the U.S. Securities and Exchange Commission (SEC) over financial restatements. The SEC alleged that the company had inflated revenue and earnings to show profits instead of losses, but Saylor and others neither admitted nor denied the allegations.
In July 2002, MicroStrategys stock price closed at 45 cents, a sharp drop from its high of $313 in 2000, and the company was facing debt problems.
Over lunch at his Bridgehampton, New York, home, venture capitalist Rick Rickertsen expressed sympathy to Saylor and asked him if he was worried about losing his company.
Its possible, Saylor said, but Id start over.
Saylor restructured MicroStrategy’s debt and implemented a 10-to-1 reverse stock split, which averted the crisis. For years, Saylor has been looking for the next big opportunity. For a while, he made a lot of personal money investing in stocks such as Google and Apple, but was dismissive of Bitcoin, tweeting in 2013 that Bitcoin’s “days are numbered.”
MicroStrategys stock price had barely budged in years, with little growth prospects ahead of it in 2020. The company has a market cap of just $1.5 billion, though its profitable and has about $500 million in cash.
During the 2020 COVID-19 pandemic, Saylor was at home in Miami, wondering what to do with the companys cash. Concerned that massive government spending to maintain economic stability could spark inflation, Saylor re-examined Bitcoin and became a staunch supporter of it. Soon, he proposed to the board of directors to buy Bitcoin with cash, and the board agreed, mainly because the company didnt seem to have a better choice. They thought that at least this move would attract some beneficial attention.
“The company was going nowhere, with virtually no interest from Wall Street,” said Rickertsen, who later served on the company’s board of directors. “The outlook was bleak.”
That year, Saylor took out half of the companys cash, about $250 million, and bought Bitcoin at a price of about $11,000 per coin. He also invested more than $100 million himself. However, the price of Bitcoin immediately fell to $9,000, and MicroStrategy lost about $40 million on paper.
“Most of us on the board were like, ‘Oh my god, what have we done? We’re going to be sued,’ ” Rickertsen said. “Saylor was worried, too.”
The panic didn’t last long. Bitcoin prices began to climb, topping $26,000 by the end of 2020. MicroStrategy borrowed billions of dollars to buy more Bitcoin, including a $205 million floating-rate loan at 8.27%, challenging loan terms at the time.
Then, in late 2022, the cryptocurrency exchange FTX collapsed, the price of Bitcoin fell below $17,000, and MicroStrategys stock price fell to about $17. The companys Bitcoin cost about $30,000, so it had a paper loss. Rumors spread that the company was in trouble. But Saylor and company upped the ante.
As Saylor stepped up his strategy of buying Bitcoin through stock and bond sales and Bitcoin prices continued to rise, the companys stock price began to soar. According to Mark Palmer, an analyst at investment bank Enchmark Company, MicroStrategy raised $23.2 billion through stock and bond sales in 2024 alone.
Saylor’s pitch may be repetitive and simplistic, but his belief in Bitcoin remains steadfast. He stressed that Bitcoin has a limited supply, unlike the U.S. dollar or even gold. Saylor believes this makes Bitcoin a better hedge against inflation. He also said that Bitcoin’s digital nature makes it easier and cheaper for holders to store and use, without the need for intermediaries, and is a “revolutionary” form of currency.
Some mutual funds and other institutions have internal rules that prohibit them from buying bitcoin and bitcoin ETFs, so MicroStrategys stock has become an indirect way for them to bet on bitcoin. Even some big conservative investors see the stock as a potential way to gain an advantage over competitors who are reluctant to dabble in cryptocurrencies.
Saylor proved adept at creating different types of equity and debt investment products, such as bank loans, convertible bonds, common stocks, etc., to ensure a steady flow of funds.
“What he does best is create different products for different audiences,” said Brett Messing, an executive at SkyBridge Capital, which manages funds heavily invested in bitcoin and advises one that holds MicroStrategy shares.
Over the past month or so, Saylor has been touting MicroStrategy and Bitcoin on TV shows, prominent podcasts, industry conferences and elsewhere. “If you’re not buying Bitcoin at the top, you’re missing out on making money,” he recently tweeted.
“He’s very vocal in public, but more nuanced in private,” said Matt Hougan, chief investment officer at crypto asset manager Bitwise, who heard Saylor speak at a dinner for 12 investors last summer. His firm manages an ETF that owns MicroStrategy shares.
If the price of Bitcoin keeps rising, the premium for holding MicroStrategy shares may continue to exist. However, if the price of Bitcoin plummets, MicroStrategys stock price may also fall. Even if the premium disappears, its stock price may also be affected as long as the price of Bitcoin remains stable. Skeptics point out that some similar investment vehicles, such as closed-end funds, tend to trade at a discount to the value of their holdings rather than a premium.
However, the company may not face an existential crisis. MicroStrategy currently has $7.26 billion in unsecured debt, most of which is issued at very low interest rates. The company holds 450,000 bitcoins at an average cost of about $62,000. Only if the price of bitcoin falls below $16,000 and remains near that level when the debt matures, the value of the companys bitcoin holdings will be lower than its debt.
Just over a week ago, Saylor unveiled a new way for MicroStrategy to raise money from investors to support its bitcoin purchase plans. He announced that the company will sell $2 billion of perpetual preferred stock this quarter. The news prompted analyst Palmer to reiterate his $650 price target for MicroStrategy stock, which is about 65% above the current share price.
