Michael Saylor, chairman and chief govt officer at MicroStrategy, throughout an interview on the Bitcoin 2023 convention in Miami Beach, Florida, US, on Thursday, May 18, 2023.
Eva Marie Uzcategui | Bloomberg | Getty Images
On the eve of MicroStrategy‘s inventory market debut in June 1998, founder Michael Saylor stayed in a penthouse suite on the Lotte New York Palace in Midtown Manhattan. Saylor, who was 33 on the time, says it was probably the most beautiful resort room he’d ever seen, paid for by lead underwriter Merrill Lynch.
The subsequent morning, Saylor went to the ground of the Nasdaq to look at his firm’s inventory open. He recalled seeing a notice scrolling throughout the ticker, warning merchants: “Please don’t confuse MSTR with MSFT.” The latter belonged to Microsoft, the software program big that had gone public 13 years earlier.
MicroStrategy shares popped 76% of their debut, becoming a member of the parade of tech corporations benefiting from the dot-com growth.
“It was a superb day,” Saylor instructed CNBC.
More than 26 years later, MicroStrategy and Microsoft had been once more linked collectively, however for a wholly completely different cause. In December 2024, Saylor stood earlier than Microsoft’s shareholders to attempt to persuade them that the corporate, now valued at greater than $3 trillion, ought to put a few of its $78.4 billion in money, equivalents and short-term funding into bitcoin.
“Microsoft cannot afford to overlook the subsequent know-how wave, and bitcoin is that wave,” Saylor mentioned in a video presentation that he released on X final week. The publish has greater than 3.6 million views.
Saylor has gone all in on that technique. MicroStrategy has bought 439,000 bitcoin since mid-2020, a stockpile that is now value about $42 billion and is the premise for the corporate’s market cap explosion to $82 billion from roughly $1.1 billion when the plan was put in place.
MicroStrategy’s software program unit, which makes a speciality of enterprise intelligence, generates simply greater than $100 million in income 1 / 4. After zooming up in 1998 and 1999, the inventory crumbled within the dot-com bust, shedding nearly all its worth. In the many years that adopted, it slowly bounced again earlier than rocketing up as a consequence of bitcoin.
Four years into its bitcoin shopping for spree, MicroStrategy is the world’s fourth-largest holder, behind solely creator Satoshi Nakamoto, BlackRock’s iShares Bitcoin Trust and crypto trade Binance.
At Microsoft, the shareholder vote supported by Saylor failed by a large margin — lower than 1% of its buyers voted for it.
But the spectacle offered Saylor, now 59, with yet one more alternative to evangelise the gospel of bitcoin and tout the advantages of changing as a lot money as potential into that single digital asset. It’s a narrative that Wall Street has been gobbling up.
MicroStrategy shares are up 477% this yr as of Friday’s shut, second to solely AppLovin amongst all U.S. tech corporations valued at $5 billion or extra, in keeping with FactSet knowledge. That follows a 346% acquire in 2023.
While the rally was in full pressure nicely earlier than November of this yr, Donald Trump’s election victory, funded closely by the crypto business, propelled the inventory much more. The shares have climbed 60% for the reason that Nov. 5 election, and eventually exceeded their dot-com period excessive from 2000 on Nov. 11.
Saylor has lengthy talked about bitcoin in an evangelical vogue and co-authored a guide about it in 2022 titled “What is Money?” But his critics have gotten louder than ever of late, describing Saylor as a cult-like chief and his technique as a “ponzi loop” that entails issuing debt and fairness to purchase bitcoin, watching MicroStrategy’s inventory worth go up, after which doing extra of the identical.
“Wash, rinse, repeat — what might probably go flawed?” wrote Peter Schiff, chief economist and international strategist at Euro Pacific Asset Management, in a Nov. 12 post on X to his 1 million followers.
Saylor, who has 3.8 million followers, addressed the rising refrain of skeptics final week in an interview with CNBC’s “Money Movers.”
“Just like builders in Manhattan, each time Manhattan actual property goes up in worth, they problem extra debt to develop extra actual property, that is why your buildings are so tall in New York City,” Saylor mentioned, in a clip that is been posted to X by his legion of followers. “It’s been going for 350 years. I’d name it an economic system.”
Saylor is a frequent visitor on CNBC, making appearances on numerous packages all year long. He additionally agreed to 2 interviews with CNBC.com, one in September and one other quickly after the election.
The first of these chats got here again on the Lotte, only a few elevator stops from the penthouse the place he stayed the evening earlier than his inventory hit the Nasdaq. Saylor was delivering a convention keynote on the resort and taking conferences on the facet.
He wore a designer go well with and an orange Hermes tie, matching bitcoin’s designated coloration. The election was lower than two months away, and crypto corporations had been pumping cash into the Trump marketing campaign after the Republican nominee and ex-president, who beforehand known as bitcoin a “scam against the dollar,” began guaranteeing a way more crypto-friendly administration.
‘Inspired the crypto neighborhood’
Two months earlier, in July, Trump delivered a keynote on the largest bitcoin convention of the yr in Nashville, Tennessee, the place he promised to fireplace SEC Chair Gary Gensler, an business critic, and mentioned the U.S. would change into the “crypto capital of the planet” if he gained.
“I believe the election yr has impressed the crypto neighborhood to search out its voice, and I believe it has catalyzed a variety of enthusiasm that was latent,” Saylor mentioned within the September interview. “When Trump got here out tentatively optimistic, that was an enormous increase to the business. When he got here out absolutely optimistic, that was one other increase.”
Until this yr, MicroStrategy was one of many few methods many establishments might purchase bitcoin. Because MicroStrategy was an fairness, funding companies did not want any particular provisions to personal it. The surroundings modified in January, when the SEC approved spot bitcoin exchange-traded funds, permitting buyers to purchase ETFs that observe the worth of bitcoin.
Since Trump’s victory, it is all been up and to the proper. Bitcoin is up about 41% and BlackRock’s ETF has climbed 39%. Gensler is getting ready to depart the SEC, and Trump has picked deregulation advocate and former SEC Commissioner Paul Atkins to switch him.
Venture capitalist David Sacks, an outspoken conservative who hosted a fundraiser for Trump in San Francisco, would be the “White House A.I. & Crypto Czar,” Trump announced earlier this month in a publish on his Truth Social platform.
“With the crimson sweep, bitcoin is surging up with tailwinds, and the remainder of the digital property may even start to surge,” Saylor instructed CNBC in a telephone interview, quickly after the election. He mentioned bitcoin stays the “secure commerce” within the crypto house, however as a “digital property framework” is put into place for the broader crypto market, “there will be a surge in your entire digital property business,” he mentioned.
“Taxes are coming down. All the rhetoric about unrealized capital positive aspects taxes and wealth taxes is off the desk,” Saylor mentioned. “All of the hostility from the regulators to banks touching bitcoin” additionally goes away, he added.
Republican presidential nominee and former U.S. President Donald Trump gestures on the Bitcoin 2024 occasion in Nashville, Tennessee, U.S., July 27, 2024.
Kevin Wurm | Reuters
MicroStrategy has gotten much more aggressive with its bitcoin purchases. Saylor mentioned in a post on Dec. 16, that over a six-day stretch beginning Dec. 9, his firm had acquired 15,350 bitcoin for $1.5 billion.
So far this yr, MicroStrategy has acquired 249,850 bitcoin, with nearly two-thirds of these purchases occurring since Nov. 11.
“We had been going to do it regardless,” Saylor mentioned, referring to the election outcomes. “But what was a headwind has change into a tailwind.”
Every week earlier than the election, MicroStrategy introduced in its quarterly earnings release a plan to lift $42 billion over three years. That included a inventory sale of as much as $21 billion via monetary companies together with TD Securities and Barclays, opening up that rather more liquidity for bitcoin purchases.
Saylor instructed CNBC it was “in all probability the only most vital earnings name within the historical past of the corporate.”
No quantity of possession is an excessive amount of for Saylor, who predicted in September that bitcoin might hit $13 million by 2045, which might equal 29% development yearly.
“We’ll simply hold shopping for the highest perpetually,” he mentioned in the identical TV interview the place he in contrast bitcoin to New York actual property. “Every day is an effective day to purchase bitcoin. We have a look at it as cyber-Manhattan.”
Saylor talks glowingly about bitcoin as the inspiration of a brand new digital economic system that may solely get greater. But even since his bitcoin technique received underway in 2020, there have been pockets of extreme ache for buyers — the inventory misplaced 74% of its worth in 2022 earlier than hovering the previous two years.
Still, he is advising corporations to imitate his technique. Microsoft did not pay attention, however Saylor mentioned there are many “zombie corporations,” with core companies that are not going wherever that might make higher use of their money.
“The conventional recommendation can be, you do a transformational acquisition, you discover that you simply want a merger associate. You’re lifeless within the water. Go discover anyone to merge with,” Saylor mentioned on the Lotte in September. “Bitcoin is the common merger associate, proper? The actual enchantment of digital capital is you may repair any firm.”
WATCH: CNBC’s full interview with MicroStrategy CEO Michael Saylor
