As the price of Bitcoin once again broke through its all-time high, MicroStrategy's stock price also soared, with an increase of more than 2,500% since mid-2020. This performance far exceeds Bitcoin's increase of about 660% in the same period, and even outperforms AI leader Nvidia.
Last night, MicroStrategy's stock price rose 15% during the day, reaching a high of $498.89, breaking the historical record again, and its market value also exceeded $100 billion for the first time. Currently, MicroStrategy has ranked among the top 100 US listed companies by market value, ranking 33rd on the Nasdaq, 89th on the S&P 500, and 85th on the overall US stock market.
As of now, MicroStrategy and its subsidiaries hold approximately 331,200 Bitcoins, with a total cost of about $16.5 billion and an average purchase price of $49,874. According to data from Bitcoin Treasuries, MicroStrategy is the publicly listed company holding the most Bitcoins in the world, far surpassing Bitcoin mining companies like Marathon, Riot, and leading cryptocurrency trading platforms like Coinbase, all of which are more 'crypto-native' in business. Analysts point out that MicroStrategy still has $15.3 billion in funds available for further Bitcoin purchases, and its aggressive accumulation strategy may continue until the end of the year.
Statistics on MicroStrategy's Bitcoin purchase dates, prices, stock prices, and market values; data source: bitcointreasuries, mstr-tracker.
In addition, the company's founder and CEO, Michael Saylor, also holds over 17,000 Bitcoins and owns 14% of the company. If the Bitcoin price reaches $100,000, Saylor's personal assets will reach $11.1 billion, enough to elevate his global billionaire ranking by nearly 200 places, surpassing Peter Thiel.
This year, during his zodiac year, 60-year-old Michael Saylor not only went all in on buying Bitcoin for the company but also leveraged his bets, completely changing his and MicroStrategy's fate with a big gamble.
Since 2020, Michael Saylor has been purchasing Bitcoin as a strategic reserve on behalf of the company. This company, originally focused on business intelligence, data analysis, and cloud computing, has transformed into the publicly traded company with the most Bitcoins globally due to its bold Bitcoin investment strategy.
However, this die-hard Bitcoin fan, who buys madly, once said ten years ago, 'Bitcoin won't last long; it's only a matter of time before it meets its end, just like online gambling.' At that time, he believed that Bitcoin would either be declared illegal and completely banned or would not be able to compete with other cryptocurrencies, thus fading from history.
So what exactly happened in the past decade that prompted Michael Saylor to transform from a skeptic of Bitcoin to its most steadfast believer and promoter today?
Playing games with God, the business genius Michael Saylor's first half of life.
'My belief is that if you're going to play a game, you might as well go all in, with no exceptions. I don't believe those who play conservatively will come out on top.'
Like other internet company founders, Saylor also has an almost legendary life story. His father was a sergeant in the U.S. Air Force, and his mother was the daughter of a country singer.
'My father was a typical, disciplined military man,' Saylor recalled. 'If you decide to do something, you must do it best, do you understand? He was an absolutely upright person. I have never seen him lie, whether to anyone or anything, he never did things half-heartedly. It wasn't until I grew up that I realized how unique this quality is. Many people like to take shortcuts or bargain, but my father never did; he never took shortcuts.'
In a color photograph, his mother, Phyllis, is smiling broadly. 'My father taught me what character is, and my mother taught me what charm is.'
His father told him that some things must be done; his mother told him he could do anything he wanted because he was smart. In seventh grade, he was named Newspaper Boy of the Year, and his mother pulled him aside, whispering in his ear, 'You will definitely make a great contribution to society when you grow up because you are gifted and smart — so make sure to use those gifts well.'
Saylor is a dedicated student; he learned to fly gliders in high school and graduated at the top of his class. Later, Saylor received a ROTC scholarship to attend MIT, where he studied the history of technology and aerospace. However, after a medical exam revealed a heart murmur, Saylor had to give up his dreams of becoming a pilot or astronaut.
The tumultuous entrepreneurial journey.
After working for a while as a computer simulation planner at DuPont, in 1989, 24-year-old Saylor co-founded MicroStrategy with his MIT roommate and fraternity brother Sanju Bansal.
At that time, Saylor realized that the internet had powerful data analysis capabilities that could help businesses analyze vast amounts of data about products and markets. Soon, customers began paying MicroStrategy hundreds of thousands of dollars each year to create intuitive charts that displayed consumer trends, such as which consumers liked specific beverages or insurance products.
The turning point in entrepreneurship truly occurred with MicroStrategy's $10 million contract with McDonald's, which was used to develop applications to evaluate the effectiveness of promotional measures and played an important role in the early development of MicroStrategy.
In 1992, 27-year-old Michael Saylor celebrated MicroStrategy's first client, McDonald's, securing a $10 million contract; source: Instagram @michael_saylor.
By 1998, when Saylor conducted an 11-day roadshow for the IPO, he had already performed exceptionally well. At that time, he invited a reporter from (The Washington Post) to document the entire process. Saylor's sales style relied on passion, stage presence, and grand narratives rather than numbers; his captivating presentations were much more engaging than PowerPoint slides.
Wall Street generally believes that although Saylor is arrogant, he is indeed very persuasive. From contemporary news reports, Saylor has a great passion for data analysis technology and has painted a compelling roadmap for the future of this technology, with investors signing contracts largely based on their confidence in him.
There is a software investor on Wall Street who loves to disparage the CEOs of software companies during meetings, claiming they're 'all garbage'. However, Saylor managed to get him to sign on the dotted line with his silver tongue. At Bear Stearns, Saylor took just 20 minutes to get the company's owner to subscribe to 10% of the shares. The world's largest mutual fund company, Fidelity, is known to be the most difficult to penetrate in the industry, but according to Saylor, he breached this company 'like a slam dunk', easily.
MicroStrategy is also a pioneer in enterprise data analysis technology, which can help retail companies, pharmaceutical giants, banks, insurance companies, and government agencies discover important trends from large amounts of data through data analysis software. With this skill, MicroStrategy has secured over 300 long-term clients, including giants like KFC, Pfizer, Disney, Allianz, Lowe's, and ABC.
After going public in June 1998, MicroStrategy quickly became Wall Street's darling. By March 2000, its stock price had reached 16 times the issue price, with a market value of nearly $18 billion.
However, at this time, MicroStrategy was caught in an accounting scandal, and its stock price plummeted 62% in one day, causing Saylor to lose $6 billion in personal wealth and even becoming the answer to a question in a trivia game: 'Who lost the most money in one day?'
In March 2000, MicroStrategy's auditing firm, PricewaterhouseCoopers, required it to restate its revenue and profits for the previous two years. After the re-audit, MicroStrategy's performance in 1998 and 1999 changed from a profit of $28 million to a loss of $37 million. Saylor and another co-founder, along with the company's CFO, chose to pay a $11 million fine to the SEC to settle related charges, with Saylor personally paying $8.3 million, but Saylor and others involved in the scandal did not admit to any wrongdoing.
Saylor graced the front page of (Daily News) on March 21, 2000.
By mid-2002, MicroStrategy's market value had plummeted to around $40 million, a 98% drop from its peak.
However, at this point, Saylor had another idea, which led to the resurgence of MicroStrategy. He foresaw explosive growth in mobile devices, so Saylor believed that programs could be developed to help clients analyze the vast amounts of data collected from users' iPhones and laptops.
Around 2009, Saylor offered his software for free to Facebook's new COO Sheryl Sandberg. MicroStrategy's technology was crucial for Facebook, enabling salespeople to know how much revenue each product could generate. Facebook ultimately became a stable client of MicroStrategy, bringing in millions of dollars annually, while Saylor also achieved sustained profitability by riding the wave of mobilization.
Become a revered thought giant admired by many.
Although the business is not particularly large, Saylor's personal life can be described as luxurious. He has a villa in Miami Beach with 13 bedrooms and 12 bathrooms. He also owns a Bombardier jet worth $47 million and two yachts. One of the yachts is named 'Hal', in memory of the ship that brought his ancestors from Rotterdam, Netherlands to Philadelphia in 1736.
Saylor is also a party enthusiast. In 2010, he threw a wildlife-themed birthday party for himself at the W Hotel in Washington, even posing for photos with a Burmese python draped around his neck. Every year before Thanksgiving, he holds a rock festival in Manhattan's SoHo, inviting guests to dress up as rock stars.
In interviews with (Fortune), Saylor's former colleagues said that besides his glamorous social life, Saylor longs to have a wide influence in the tech world; he wishes to become a renowned thought leader. As one former employee put it, he wants 'to become a thought giant admired by many.'
However, according to former colleagues, Saylor is an emotional and detail-oriented manager, with some saying he 'manages too strictly.' Saylor is an extremely confident person, so he believes he can handle everything himself, which is why he is reluctant to delegate too much authority to his subordinates.
But it turned out that Saylor is very good at observing major trends. He published a bestseller in 2012 (The Mobile Wave: How Mobile Intelligence Will Change Everything), in which he foresaw how mobile devices would trigger revolutions across various fields from retail to banking.
Saylor has established at least two notable new businesses within MicroStrategy. A former colleague of Saylor commented, 'He has the ability to foresee the future.'
In the late 2000s, Saylor developed a monitoring platform that allowed households and businesses to monitor their security systems via the website Alarm.com. In 2008, he sold this business for $28 million. In the early 2010s, Saylor developed the first cloud-based automated voice response systems for call centers, naming it Angel. In 2013, Genesys acquired Angel for $110 million.
His former colleagues stated, 'Saylor does not allow people to do things their own way, but without that freedom to operate, people cannot grow. Of course, I think the benefits outweigh the drawbacks. Just think, if you followed his investments every step of the way, first in the internet, then in mobile technology and cloud computing!'
However, Saylor's emotional and unpredictable style has also put a lot of pressure on management and somewhat hindered the company's development. Since 2018, he has replaced three marketing directors, and a CFO left after just a year. Saylor struggles to retain top talent, which explains why he has not been able to scale up and strengthen excellent ideas like Angel and Alarm.com, but instead sold them to other companies.
Michael Saylor's favorite game is Dungeons & Dragons, and he has consistently strived to become a Dungeon Master because he 'likes to create and control the situation.' His many correct decisions throughout his business journey are closely tied to his judgment of situations.
Saylor's entrepreneurial experience in the first half of his life has given him sufficient risk-taking experience. Saylor believes in Christianity and has been baptized, but in his view, life in the real world is like playing a game with God. 'Look at my ring — there's a dam, right? And there's a beaver. This beaver is playing a game with God amidst the waves. Edison was also playing a game with God. Rockefeller, Carnegie... these people are just like me; this life is just a game.'
The second half of Michael Saylor's game has begun.
Get Musk on board. Why does Saylor want to buy Bitcoin?
In 2015, MicroStrategy's revenue was $134 million, but after that, the company's operating income declined year by year. By 2018, revenue had plummeted to $3.981 million, and in 2019, a loss of $1 million was recorded. In the first three quarters of 2020, MicroStrategy incurred a revenue loss of approximately $14.02 million.
At that time, the world was in the midst of the pandemic black swan, and Saylor had an epiphany. At that time, MicroStrategy had a large amount of cash, and Saylor was concerned that the Federal Reserve's loose monetary policy would exacerbate inflation, leading to a severe devaluation of the cash he held.
At the quarterly meeting in July 2020, Saylor announced that MicroStrategy planned to purchase Bitcoin, gold, and other assets to replace the cash still held on its balance sheet.
A month later, MicroStrategy used $250 million of its cash reserves to purchase 21,454 Bitcoins. In September and December 2020, MicroStrategy spent $175 million and $50 million, respectively, to buy more Bitcoins.
In December 2020, to further expand its Bitcoin holdings, MicroStrategy issued $650 million in convertible bonds, which typically have long maturities, most maturing in 2027-2028, and some even as zero-coupon bonds. This allowed the company to maintain relatively low financing costs over the next few years, and after obtaining the bond financing, it quickly used it to purchase Bitcoin, directly adding it to the company’s balance sheet.
Through debt financing, MSTR continuously purchases Bitcoin, a behavior that not only increases the number of Bitcoins on its balance sheet but also has a significant impact on the market price of Bitcoin. As the proportion of Bitcoin in MSTR's portfolio increases, the correlation between the company's stock market value and Bitcoin prices has further strengthened. According to MSTR Tracker, the correlation coefficient between MSTR's stock price and Bitcoin price surged to 0.55 recently, reaching a historical high.
Since late last year, MicroStrategy has adopted a new way of buying Bitcoin, namely by issuing and selling its own MSTR stock to purchase more Bitcoin. This 'selling stock to buy Bitcoin' strategy may seem very foolish at first glance, as it could harm the stock price and even threaten MSTR's market positioning as 'leveraged Bitcoin'. However, a careful analysis of the logic chain shows that the issuance not only does not negatively impact MSTR's price but actually makes MSTR more valuable.
Related reading: (Why has the premium of MSTR suddenly skyrocketed despite the unchanged 'selling debt to buy Bitcoin' strategy?)
When MicroStrategy issues new stock to buy Bitcoin, the newly issued shares typically trade at prices above their net asset value. With this premium, MicroStrategy can buy more Bitcoin when selling each share of MSTR than what the stock truly represents.
For example, based on the correlation coefficient between MSTR and Bitcoin, 36% of the value of each share of MSTR represents the Bitcoin that the company backs. Without any premium, when MicroStrategy sells MSTR, it can only exchange for 36% of Bitcoin from the market. However, currently, the premium of MSTR to Bitcoin is around 2.74, meaning that whenever MicroStrategy sells a share of MSTR, it can exchange for about 98% of Bitcoin.
This means that the company can use funds above the net asset value of Bitcoin to increase its Bitcoin holdings, thereby expanding its Bitcoin position on the balance sheet. The core of this strategy is that MSTR, through high premium financing, has accelerated the speed and scale of Bitcoin acquisition, far exceeding the previous 'debt issuance to buy Bitcoin' speed.
According to the latest 8-K filing, MicroStrategy achieved a 41.8% Bitcoin yield in 2024, which translates to a net gain of 79,130 Bitcoins for shareholders — an average of about 246 Bitcoins per day — all without incurring the high costs associated with mining. If all miners worldwide were to achieve the same results, it would take about 176 days.
As a result, Saylor has established two firsts: first, making MicroStrategy the first publicly traded company to purchase Bitcoin and incorporate it into its capital allocation strategy, and second, being the first company to dare to use borrowed money to buy Bitcoin.
'Fix the balance sheets of the world.'
Not only does he buy for himself, Saylor also suggests that his business mogul friends buy as well.
Four years ago, Musk, known as 'Comrade Ma Baoguo' alongside Trump, had not yet delved so deeply into cryptocurrency. In December 2020, Musk posted a somewhat teasing image of a monk with hands clasped in prayer, gazing upward in reverence, yet unable to resist the allure of Bitcoin. Saylor responded to Musk's suggestion that he do 'something worth $100 billion for Tesla shareholders' by converting Tesla's balance sheet from dollars to Bitcoin.
Musk asked, 'Is such a large transaction feasible?' Saylor responded, 'Of course, I have purchased over $1.3 billion in BTC in the past few months and would be happy to share my strategy with you privately.'
In February 2021, Tesla, led by Musk, disclosed that it had used cash on its balance sheet to purchase $1.5 billion in Bitcoin and announced it would start accepting Bitcoin as a payment method for its products.
In October this year, Saylor called out to Microsoft CEO Satya Nadella, saying, 'If you want to make another trillion dollars for Microsoft shareholders, please contact me.' According to an SEC document, Microsoft is preparing to discuss possible Bitcoin investments at its shareholder meeting in December.
(Time) magazine once interviewed Saylor, and the reporter opened with a question about whether Bitcoin was a form of irrational exuberance, 'Even if people do not believe something has value, they will blindly join the gamble out of envy for others' success.'
Faced with this sharp question, Saylor confidently replied, 'No, on the contrary, Bitcoin is a textbook case of rational response to inflation. The so-called 'rational behavior' is to find a means of value storage that can preserve and increase value. Speculation, on the other hand, involves depress opponents through short selling, squeeze, etc., that is called speculation. Investing in Bitcoin is not speculation at all! Bitcoin is a brand new technology, comparable to Facebook and Google in the financial world, with huge potential for future appreciation.'
The reporter posed a more challenging question: 'Since Bitcoin has such a bad reputation?'
'A new paradigm means a complete change in the way we view the world, and those who benefit from the old system often refuse to accept such new things. Our only hope lies with the next generation, because unless war or a very serious event occurs, these vested interests will not change their views, while the young people are different.'
The reporter asked, 'So what are your ambitions?'
Saylor only said one sentence: 'I want to fix the balance sheets of the world.'
Michael Saylor's enthusiasm for Bitcoin is not just a business adventure; it is a belief. From a data analysis pioneer to a staunch promoter of Bitcoin, he has driven the transformation of MicroStrategy with his powerful personal will and business insight, while also showing the market how to reshape a company through extreme risk-taking.
However, this high-stakes strategy has also raised market doubts. Some analysts worry that MicroStrategy's high leverage exposure to Bitcoin may amplify the impact of market volatility on the company, especially in the event of drastic Bitcoin price fluctuations. Furthermore, although Saylor claims he wants to fix the balance sheets of the world, whether such a vision can truly withstand the test of time remains to be seen.
Saylor once said, 'Life is a game', and it is clear that he has no intention of stopping this game about Bitcoin.
Reference article:
https://fortune.com/2022/08/03/michael-saylor-microstrategy-stock-bitcoin-bet-debt-outlook/
https://time.com/5947722/microstrategy-ceo-bitcoin/
