MicroStrategy founder and president Michael Saylor has been through ups and downs over the past 25 years. First, the bursting of the dot-com bubble in 2000 erased a staggering 99% of the company’s stock value. In 2022, Bitcoin, a significant part of MicroStrategy’s balance sheet, is down more than 70% from its ATH in November.

However, as of March 2024, MicroStrategy (MSTR) has seen an astonishing 461.7% increase in share price over the past year. Despite all the dramatic developments, MicroStrategy has been a success story for its investors.

Who owns MicroStrategy?

develops and delivers enterprise mobility and analytics software, including the MicroStrategy Analytics platform and MicroStrategy Server. The company generates revenue through licensing agreements, cloud-based subscriptions and related services linked to its platform.

Saylor is MicroStrategy’s largest shareholder, with Class B holdings valued at more than $2 billion, with control of 68% of the votes. Capital Research and Management Company and The Vanguard Group, Inc. are the second and third largest shareholders.

Although Saylor sold 400,000 voting shares from December to April, his holding did not decline dramatically.

Big bet

Saylor’s strategy as president of MicroStrategy revolves around leveraging low-cost debt to raise substantial funds. With interest rates below 1% per year, the company accesses affordable capital, maximizing the impact of the investment.

MicroStrategy innovatively uses its shares (MSTR) to repay debt instead of cash, offering creditors a premium over the share price at the time of issuance. This approach benefits MicroStrategy and aligns interests with creditors.

In 2020, Saylor made the strategic decision to protect himself against currency devaluation by investing MicroStrategy’s extra money into Bitcoin. At that time, MicroStrategy raised $3.4 billion through various financial instruments to acquire Bitcoin, totaling $4 billion in purchases at rising prices.

The idea is that MicroStrategy can pay off its fiat debt in the future by selling less Bitcoin, taking advantage of Bitcoin’s potential as a store of value with long-term capital appreciation. In an October 2020 tweet, Saylor revealed that he personally owned 17,732 BTC worth $250 million. It’s safe to assume he’s acquired more since then.

Long-term strategy

Over the past four years, MicroStrategy has acquired 214,246 BTC, which represents about 1.02% of the total supply. In its latest buying spree, the company began buying Bitcoin in late December 2023, just before the last rally.

According to the SEC filings, between February 15th and 25th, the company invested US$155.4 million to acquire 3,000 BTC. An additional 9,000 tokens were purchased for $623 million in convertible notes between March 11-18.

MicroStrategy has spent nearly a quarter of its total Bitcoin purchases in 2024, with an average cost more than double last year’s average cost, according to data compiled by Bloomberg.

Today, the software company holds 214,246 BTC, valued at over $14 billion, which represents about 1% of the total BTC supply in circulation. MicroStrategy has been the largest Bitcoin holder among public companies for some time. However, recently, BlackRock overcome MicroStrategy holdings through its iShares Bitcoin ETF (IBIT).

Source: zerohedge

It was recently disclosed that BlackRock and Fidelity collectively own 428,304 BTC worth $27.7 billion through their spot Bitcoin ETFs. These ETFs hold 214,058 more Bitcoins than MicroStrategy.

Does the strategy work in the long term?

MicroStrategy’s average purchase price of $31,554 per BTC resulted in a current market cap of over $13 billion, representing a substantial return on its initial investment.

Since April 2019, BTC prices have risen from $5,170 to around $66,500 at the time of writing. Over the past five years, MicroStrategy (MSTR) stock has returned 910%, significantly outperforming the broader market returns.

Although MicroStrategy shares have pulled back recently, they are up more than 90% this year after a remarkable 346% increase in 2023.

However, the company’s share price is not in line with business performance. In 2023, MicroStrategy’s business generated nearly $496 million in revenue, while operating profit was just $800,000, down from $11 million in 2022.

Source: Fidelity

Overall, whatever business model works, investors will like it. Saylor’s pioneering integration of Bitcoin into corporate treasuries positioned MicroStrategy for long-term success and paved the way for other companies to follow suit. This strategy demonstrated Bitcoin’s potential to serve as a store of value and influenced broader adoption in the corporate sector.

About the author

Dan is an editor and news writer with 12 years of experience in finance and emerging technologies, with a strong focus on cryptography. Covering a wide spectrum of topics from fintech startups to AI, it provides an in-depth overview of the current state of the crypto market along with insights into its potential for future disruption.

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