Chairman Michael Saylor’s bitcoin buying strategy may be coming under scrutiny as the launch of BTC exchange-traded funds (ETFs) appears imminent.
Saylor began buying bitcoin in 2020, citing the need to reduce the company’s cash holdings due to the projected threat of inflation. The move came as revenue from the software business remained stagnant.
Saylor, who later stepped down as CEO last year, said he would focus on the bitcoin component of the company’s dual strategy.
Following a key court loss earlier this year, the U.S. Securities and Exchange Commission (SEC) appears poised to approve ETFs that invest directly in bitcoin, leading investors and analysts to question whether MicroStrategy’s stock will continue to command a premium.
According to , MicroStrategy’s most recent filing raises that question somewhat.
Since mid-2020, Saylor has accumulated more than $5.5 billion in bitcoin. During that time, MicroStrategy’s stock has more than tripled as the value of bitcoin has risen.
Based on his 158,245 bitcoin holdings as of September, MicroStrategy’s stock is estimated to trade at a 30% premium to the company’s enterprise value.
According to an analyst perspective reported by Bloomberg, if the SEC approves the ETFs in the coming months, MicroStrategy’s premium could fall to a range of 15% to 25%.
While the introduction of ETFs could spark a rally in , one analyst believes that this will offset a reduction in the premium by increasing MSTR’s share price.
Between August 1 and September 24, MicroStrategy purchased 5,445 bitcoins for approximately $150 million. To fund the purchase, the company issued and sold a total of 403,362 shares of MSTR stock.
