Even with Bitcoin’s recent 40% slump, MicroStrategy’s Michael Saylor says his multibillion-dollar bet on the world’s largest cryptocurrency will never back down.
The enterprise software company holds an increasing amount of bitcoin. So let the company’s stock price mirror this digital asset. However, the company’s founder and CEO remained optimistic when asked if he would be willing to sell in the face of a potentially lingering bear market.
MicroStrategy buys large amounts of Bitcoin
Saylor gained attention in the summer of 2020, when the Tysons Corner, Virginia-based company first announced a cash management plan centered on buying bitcoin. The company’s shares rose more than 900% at one point. But it has taken an aggressive stance, using the stock-linked and bond markets to fund bitcoin purchases, continuing to add to an already roughly $5 billion stockpile, with recent signs of diminishing returns.
Shares of MicroStrategy have underperformed bitcoin as risk appetite wanes, leading to a sell-off in bitcoin. Moreover, since late February, the average price of each bitcoin purchase the company has announced is above current trading levels. However, according to the filing, the company had about 124,391 bitcoins as of the end of December, as the purchase of earlier ties was still profitable.
Saylor said Bitcoin’s fall from nearly $69,000 in November to less than $40,000 this month doesn’t make him nervous. In fact, they are a source of “great comfort” given rising inflation.
“The best defense against inflation is the Bitcoin standard. So in an inflationary environment, I really don’t think we can do anything better than converting our company’s balance sheet to Bitcoin.”
Michael Saylor
Michael Saylor sees Bitcoin strategy as an alternative
Faced with a slowdown in cash flow growth relative to the U.S. money supply, Saylor began using the Bitcoin strategy as an alternative to stock buybacks and acquisitions. The idea made him an overnight success in the world of virtual currencies, and Musk and others followed suit and added bitcoin to Tesla Inc.’s balance sheet. However, money managers continue to debate the pros and cons of the world’s largest digital asset as a hedge against inflation due to a lack of historical data.
“If we do nothing, I have a feeling for the consequences because I have seen 99% of our competitors die, and if we maintain the status quo, I can see where we are going, we either have a Bitcoin strategy or Sell the company. We choose to go after Bitcoin.”
The market capitalization of Bitcoin stored in MicroStrategy has exceeded the market capitalization of the company. However, Saylor remains committed to buying more bitcoin as the company continues to generate cash flow. And he expects more Wall Streeters to join the bandwagon at current prices.
“I think it’s consolidating at this level,” said Saylor, who advocated buying from $11,000 to $59,000.
“It’s a good entry point for institutional investors.”
Michael Saylor
