MicroStrategy Overtakes Amazon As It Doubles Down On Bitcoin Strategy
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MicroStrategy's bonds are up big, with every single one of their convertibles, which they have been issuing since 2020, now trading at a premium. Fixed-income investors are limited when it comes to gaining bitcoin exposure, and MicroStrategy's suite of bond issues have served as something of an actively-managed bitcoin bond to fill that gap in the market.
They've issued one convertible bond so far in 2024, going live last Friday with a coupon of just 0.625% and a 6-year time to maturity, and it is already 35 points above par. Another convertible bond will be issued on Monday with a coupon of 0.875% and a 7-year time to maturity.
Convertibles are an extremely cost-effective way to raise funds for issuing companies since they are issued at extremely low interest rates. MicroStrategy has struck while the iron is hot with two back-to-back issues as bitcoin's price has surged, drawing up MicroStrategy's stock price and their commensurate borrowing ability along with it:
Their December 2020 issue is trading at a staggering 421.52 points, issued at the bond standard of par value 100 points. Adding bitcoin to their corporate treasury is objectively one the greatest decisions in the history of corporate finance:
The surge in demand is not just coming in fixed income either. MicroStrategy's stock has eclipsed Amazon's traded US dollar volume in 3 out of the last 5 trading sessions. Investors across all assets are craving exposure to bitcoin, and it is getting high beta exposure to it with MicroStrategy:
If we expand this chart to include all of the US' mega-cap tech companies, and compare percentage returns from March 15th 2023 to today, the one-year performance of MicroStrategy has eclipsed every other major name by several hundred percent.
In a year where mega-cap tech giants outperformed analyst expectations and had resoundingly successful years, the software company that simply held bitcoin on its balance sheet outperformed them all by several orders of magnitude:
Zooming out to the last decade, MicroStrategy is up 1302%, leaving all mega-cap tech giants except for Nvidia in the dust. The closest runner-up is Tesla, which abandoned its corporate bitcoin strategy in 2022 to boost liquidity—MicroStrategy, despite all of the negative press, held through thick and thin and is reaping the rewards from both a stock, bond, and media perception perspective:
MicroStrategy now holds ~205,000 bitcoin as of March 11th at an average purchase price of roughly ~$33,700 per coin and shows no intention of slowing their purchases or selling. Not only has the value of their BTC holdings doubled, but they have contributed to their stock price soaring 1302% over the last decade, magnifying shareholder value several times over and paving the way for further debt issuance to continue magnifying shareholder value.
The MicroStrategy flywheel, if you will, is getting some serious eyeballs. With such fervent demand bitcoin coming out of the woodwork, and the proven success of holding it on your company's balance sheet, copycats are bound to emerge. Other companies are heavily floating the idea of adding bitcoin to their corporate treasuries, including BlackRock and Tesla (again).
Final thought: the halving is one month away and $100,000 bitcoin has never been closer. If you're not giddy with excitement, you're in the wrong industry.
Take it easy,
Joe Consorti
Theya is an app for simplified Bitcoin self-custody. With its 2-of-3 multisig custody solution, you can enjoy maximum security for your Bitcoin and the peace of mind that comes with it. Your Keys, Your Bitcoin.
Download Theya on the App Store and secure your bitcoin with ease.