MSTR Shareholders Getting Diluted
https://blossom.primal.net/47dcf2e0d1bb99e529f2f40c8565c94e111785d6ee991edf9c403c763af46e13.mp4
Hi Matt, long time fan and viewer of your content and I appreciate all the work you are doing on BIP-110.
I appreciate you don’t like the FIAT games here. I own a chunk of MSTR, as a resident in the UK we can’t hold Bitcoin directly in tax advantaged accounts (SIPP or ISA), not even in ETFs. So MSTR is a natural option for some to gain bitcoin exposure in some circumstances with that trapped capital.
I created https://mstr.rip site to show where they are on preference share plus dividends vs btc bought at outset - at the moment they are notionally $5bn down. A huge loss! This can change quickly though and the notional breakeven price is around $95k for that conceptual question.
I agree with the dilution point on the recent buy, but it’s marginal and hardly a death spiral. Volatility works as a friend to their model in general, and it’s only 6 months since Bitcoin ATH. I’d be interested in your thoughts on how MSTR get into serious trouble - in my view one underrated option they have is “do nothing” - pay the dividends out of cash for 7 months, sell BTC thereafter if they absolutely have to, and even at a $60k btc price they are then having to sell 2,383btc or 0.3% of their btc per month to meet dividends.
I can see why he did the recent buy though - trying to balance the confidence in the prefs with longer term looking to increase btc per share for common equity holders.
Other options exist for funding also - they could issue further convertible debt at likely low interest to roll over existing convertible obligations once due, but clearly they’d rather avoid this, with it sitting senior to prefs.
We are deep in a Bitcoin bear market already though and I think many overestimate MSTR’s potential impact in what is a deeply liquid spot Bitcoin market.
TLDR - Bitcoin will be fine, and MSTR? Whether they outperform Bitcoin very long term likely all rests on Bitcoin returning more than the dividend yields required to pay the prefs.
I appreciate you don’t like the FIAT games here. I own a chunk of MSTR, as a resident in the UK we can’t hold Bitcoin directly in tax advantaged accounts (SIPP or ISA), not even in ETFs. So MSTR is a natural option for some to gain bitcoin exposure in some circumstances with that trapped capital.
I created https://mstr.rip site to show where they are on preference share plus dividends vs btc bought at outset - at the moment they are notionally $5bn down. A huge loss! This can change quickly though and the notional breakeven price is around $95k for that conceptual question.
I agree with the dilution point on the recent buy, but it’s marginal and hardly a death spiral. Volatility works as a friend to their model in general, and it’s only 6 months since Bitcoin ATH. I’d be interested in your thoughts on how MSTR get into serious trouble - in my view one underrated option they have is “do nothing” - pay the dividends out of cash for 7 months, sell BTC thereafter if they absolutely have to, and even at a $60k btc price they are then having to sell 2,383btc or 0.3% of their btc per month to meet dividends.
I can see why he did the recent buy though - trying to balance the confidence in the prefs with longer term looking to increase btc per share for common equity holders.
Other options exist for funding also - they could issue further convertible debt at likely low interest to roll over existing convertible obligations once due, but clearly they’d rather avoid this, with it sitting senior to prefs.
We are deep in a Bitcoin bear market already though and I think many overestimate MSTR’s potential impact in what is a deeply liquid spot Bitcoin market.
TLDR - Bitcoin will be fine, and MSTR? Whether they outperform Bitcoin very long term likely all rests on Bitcoin returning more than the dividend yields required to pay the prefs.
❤️3