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MSTR

$421.88 +6.19 %

MICROSTRATEGY INCORPORATED

Market closed - Nasdaq 22:00:00 22/11/2024 Pre-opening 13:46:41421.88 USD +6.19 % 437.65 +3.74 %

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MicroStrategy Incorporated: The old joke is back in the spotlight

November 25, 2024 at 12:53
By Odile Dubois

"Certainly, a German bank." We often resort to this joke when we wonder what institutional investor could have been credulous enough to purchase a financial product of dubious quality.

The joke dates back to the time of subprime mortgages when it was discovered with astonishment that several regional German banks had acquired countless junk debt securities that had been sold to them with complete confidence by American counterparts, surely delighted to have found such good disposition in Europe.

Is history doomed to repeat itself? Perhaps not in such dramatic proportions, but over the weekend our analysts were somewhat surprised to discover that the German insurer Allianz was the main buyer - a quarter of the issuance - of the latest 0% convertible bonds issued by MicroStrategy.

We have already discussed the case in detail, especially in this column a few months ago with MicroStrategy Incorporated: The good side and the bad side of trading and last week with MicroStrategy: the company that outperformed Nvidia - Crypto Recap.

The author stands firm and warns that the operation is a full-blown Ponzi scheme. And that's it. Because MicroStrategy, let's not forget, is capturing free capital and redirecting it towards a highly speculative asset that yields no returns, thus artificially driving up its stock price in the process; meanwhile, the main architect of this maneuver - MicroStrategy's president, Michael Saylor - is selling his shares in the company as fast as he can.

Why should I lose my nerves? MicroStrategy owns 331,200 bitcoins, or 31 billion USD in asset value at the last price of the cryptocurrency. If we deduct the 4 billion USD in debt, the company's equity value - which could evaporate in a matter of days if the cryptocurrency plummeted - amounts to 27 billion USD, compared to its current market capitalization of 85 billion USD.