The Impact of MicroStrategy on Tech Stocks
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The Impact of MicroStrategy’s Crypto Acquisition on Tech StocksEarlier this week, Michael Saylor published a presentation to Microsoft’s Board of Directors. I wrote about it in detail on X. Overall, it’s terrific. Saylor is a billionaire tech investor and founder. He knows how to make money in the industry. It also helps that crypto is becoming mainstream. So let’s dive into a few of his concepts here.
MicroStrategy’s crypto premiumMicroStrategy has experienced significant growth this year. The stock is up almost 5x this year. Which is no surprise to crypto investors, but probably a shock to even the average tech investor. In this particular case, the two main drivers have been Saylor loading up on Bitcoin and Bitcoin hitting $100k today for the first time.
Now the tough part with MicroStrategy's stock is they focus on business intelligence software but trade like a Bitcoin ETF. There is a significant premium with the stock. This company does ~$500m in revenue but is valued at ~$90 billion. Your stock screener wont identify that MicroStrategy owns ~$40 billion of Bitcoin. This changes the risk profile for the stock. The Bitcoin BoardsRight now several notable institutions have been buying Bitcoin specifically, for months. BlackRock is the most notable because of their crypto ETFs. Several issuers are coming to market like WisdomTree. Even Tesla still owns a $800m position in Bitcoin today. Which is why I wasn’t surprised to see his presentation to Microsoft’s Board of Directors this week.
Saylor’s core thesis revolves around Bitcoin’s scarcity as an asset. This implies that the demand for Bitcoin will go up and Microsoft will benefit if they have it on their balance sheet. The 3-minute pitch is worth watching. To be honest, I wont be surprised if Microsoft buys $200-300m in Bitcoin and Ethereum this month. Currently, they have ~$70 billion in cash so adding crypto to the balance sheet wont impact their portfolio by much. But it will increase the confidence for other investors and Fortune 500 companies to tag along. If Microsoft build a Bitcoin position, crypto prices will continue to rise. Maybe go up another 4-5% before a selloff. But investors will become more confident in its store of value. |
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