Michael Saylor’s MicroStrategy Purchased 18.3K More Bitcoins for $1.1B:
The new purchases was made at an average price of $60,408 per token, Executive Chairman Michael Saylor said in an X post on Friday morning, boosting the company’s holdings to 244,800 BTC. MicroStrategy’s cost basis for those holdings is $9.45 billion, or an average price of $38,585 per bitcoin. At the current price just under $58,000 the stack is now worth about $14 billion.
So at a current price of $58k, his purchases is already underwater by 5%. His recent purchase was funded with stock sales.
So, in other words, Saylor sells inflated MSTR stock to buy more Bitcoin, yet MSTR stock is rising in anticipation of more purchases and a higher Bitcoin price. Admittedly, I don’t have an accounting degree, but this reeks of a pyramid or Ponzi scheme. This cannot possibly be sustainable unless Bitcoin goes up. The price action however looks very weak and Bitcoin is much more likely to dump than go up.
He and others have been promising ‘$1 million Bitcoin just around the corner’ for the past 5 years. Meanwhile, the price has continued to languish at under $60k. If I were him I would have kept the $1 billion on the sidelines. He will need it as BTC keeps falling to pay off the interest from the borrowed money for his earlier purchases, which are or soon to be underwater too. Sure, the hype helps MSTR stock and makes Saylor richer on paper in the short-term, as is typical of Ponzi schemes until it all comes crashing down, which it eventually will.
Saylor has a history of fraud:
Saylor was MicroStrategy’s chief executive officer from 1989 to 2022; in 2000, Saylor was charged by the SEC with fraudulently reporting MicroStrategy’s financial results for the preceding two years. He later reached a settlement with the SEC for $350,000 in penalties and $8.3 million in personal disgorgement.
Don’t you hate it when as CEO of a public company you accidently misreport earnings for 2 years, only to correct the problem when potentially facing criminal charges? Mistakes happens, you know?
His average buy-in price is around $35k/coin. His first purchase was in September 2020 at $10k/coin. So the present price of $58k divided by $35k gives a 65% return. Had he bought QQQ instead he would have made more but with less risk.
And this is assuming Bitcoin says at $58k–it’s much more likely it will fall in half than double. I am still forecasting $20k soon, likely next year, which point all his purchases will be deep underwater and MSTR stock should be considerably lower. Although I have not yet made a bet against MSTR stock.