Is MicroStrategy overvalued or undervalued? \ stacker news ~bitcoin

Is MicroStrategy overvalued or undervalued?

1677 sats \ 26 comments \ @kr 13 Mar bitcoin

Right now, MSTR is trading for roughly 2x the value of their BTC holdings ($30b market cap vs. $15b of bitcoin)

Historically, they’ve traded closer to 1x the value of their BTC holdings (albeit with a wide variance).

Curious to hear how stackers think about valuing the MicroStrategy business.

PS. Prior to buying Bitcoin, the company was worth ~$1B if you want to factor their software business into your calculations.

MSTR is overvalued36.2%

MSTR is undervalued20.7%

MSTR is correctly valued12.1%

I have no idea31.0%

58 votes \ poll ended

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1805 sats \ 0 replies \ @endothermicdev 13 Mar

I've been trying to figure out MSTR's valuation. You can't strictly compare their bitcoin holding to their market cap due to their USD debt load. As you mention, there's also the underlying value in their business. But there's no good way to square these three aspects. The best I've been able to do is cancel out their business income with the cost of servicing their debt, but that still assumes access to capital at current interest rates, etc..

In the end, it's basically a leveraged play on the price of bitcoin coupled with a short position on their effective real interest rate. Both of those are well positioned right now, but I think there are more factors at play - 61% of MSTR shares are held by institutions. These may be restricted in the types of investments they can make. Perhaps custodying their own bitcoin wasn't an option to them, nor the ETFs. In that case, buying the MSTR bonds may have been a unique opportunity that could result in an increased demand for MSTR beyond the underlying bitcoin price. My thinking is there must be more of these types of investors where MSTR is somehow their best option.

Beyond all of that, there's rampant speculation as well. Something like 21% of the MSTR shares available to trade are held short. This is actually down substantially from previous weeks. This active short squeeze is just another dimension to the puzzle, but it has definitely been boosting the share price.

Conclusion: I have no idea what Microstrategy's fair value really is.

224 sats \ 7 replies \ @grayruby 13 Mar

It's overvalued in Bitcoin terms. It is undervalued in fiat terms.

113 sats \ 6 replies \ @kr OP 13 Mar

what’s the correct valuation as a multiple of their bitcoin holdings? 1x? more? less?

181 sats \ 5 replies \ @grayruby 13 Mar

Less because the software business is worth less than their debt but that is merely looking at the book value of the business.

On the flip side if you think that Bitcoin will continue to rise in value over the next 5 years and that Saylor will continue to be able issue shares/debt to acquire more and that MSTR will be added to the S and P 500 and get the benefit of ever increasing passive flows as it's marketcap grows and it becomes a larger share of the S and P 500 you could make an argument that it should trade at a reasonable premium to the Bitcoin holdings. Whether 2x is reasonable premium or not is for smarter people than me to figure out. I would argue it's a bit rich.

50 sats \ 2 replies \ @kr OP 13 Mar

reasonable take, i forgot to account for their debt load

10 sats \ 0 replies \ @grayruby 13 Mar

Easy oversight this day and age. No one cares about debt anymore. Haha

0 sats \ 0 replies \ @SpaceHodler 14 Mar

But that debt should become a smaller fraction of the NAV as the fiat price of bitcoin rises?

10 sats \ 1 reply \ @Undisciplined 13 Mar

What would be the reason to buy them at 2x the bitcoin price, when you could just buy an ETF at closer to parity?

If their bitcoin holdings more than double, while the number of shares stay the same, then I guess you're getting good value.

25 sats \ 0 replies \ @grayruby 14 Mar

Maybe short covering. Maybe speculation it will get added to S&P 500.

158 sats \ 5 replies \ @DarthCoin 13 Mar

Why people always forget what are those MSTR shares?

Why people ignore who is behind all of this?

Why people refuse to see who is actually controlling the whole narrative? https://finance.yahoo.com/quote/MSTR/holders?fr=yhssrp_catchall

21 sats \ 3 replies \ @kr OP 13 Mar

i feel like i need to hear the whole story of this CIA connection now

69 sats \ 0 replies \ @DarthCoin 14 Mar

Listen Whitney Webb podcast and is all explained there.

0 sats \ 0 replies \ @DarthCoin 14 Mar

https://corbettreport.com/flashback-inqtel/

0 sats \ 0 replies \ @PRA3S3NT1A 14 Mar

me too😂

0 sats \ 0 replies \ @PRA3S3NT1A 14 Mar

How reliable this C.I.A source ?

148 sats \ 0 replies \ @orthwyrm 14 Mar

I have no idea. I'm not smart enough to comprehend Saylor's financial ju-jitsu.

That said, you may be interested in this on-going series which is evaluating the MSTR stock in fine detail (3 hours thus far): https://www.youtube.com/@Quant_Bros

Personally I find the whole thing incredibly funny. Saylor is launching a speculative attack and getting fabulously rich in the process, while pissing off both the fiat-bros and ardent maxis simultaneously.

(he's raising yet another $500M as I type this lmao)

120 sats \ 2 replies \ @kepford 13 Mar

I really have no idea but my gut tells me the price is running hot. It is interesting to watch for sure.

31 sats \ 1 reply \ @kr OP 13 Mar

i get the same feeling, but i do think they’re worth more than 1x their BTC holdings.

21 sats \ 0 replies \ @kepford 13 Mar

I have no idea. My guess is no. My best guess is people are buying because it is going up and its a proxy for bitcoin since Saylor keeps buying and shows no signs of stopping.

69 sats \ 0 replies \ @netstatic 14 Mar

People don't understand that investing in MSTR is shorting the financial system (as opposed to just shorting the dollar by holding Bitcoin).

MSTR takes advantage of the easy access to capital/debt to buy Bitcoin. The true business is fundraising to take a (fiat-enabled) leveraged position against the dollar. Saylor may not appreciate Bitcoin the same way cypherpunks do, but he does understand it's position in our global economy as the scarcest asset on earth.

0 sats \ 0 replies \ @PRA3S3NT1A 14 Mar

Probably it is a bubble before rate cuts

0 sats \ 1 reply \ @SpaceHodler 14 Mar

Check out these guys' videos: https://youtube.com/@Quant_Bros

They have a very bullish thesis.

0 sats \ 0 replies \ @SpaceHodler 14 Mar

They're going to have Preston Pysh with them in the next episode, by the looks of it.

0 sats \ 0 replies \ @Cowboy 14 Mar

MicroStrategy Announces Proposed Private Offering of $500 Million of Convertible Senior Notes $MSTR

https://www.microstrategy.com/press/microstrategy-announces-proposed-private-offering-of-500-million-of-convertible-senior-notes_03-13-2024

0 sats \ 1 reply \ @NoIdols 13 Mar

MSTR is definitely overvalued and its CEO is encouraging the debt slavery system (with his infinite borrowing), which has been ruining the world in the last 100 years

12 sats \ 0 replies \ @JesseJames 13 Mar

I beg to differ, I think he is taking full advantage of it. I also think he is right but to each his own. He is doing what our government is doing since 1971.