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“MICROSTRATEGY FORCED TO LIQUIDATE THEIR BTC!” No. Can’t happen! Read this to find out why…

https://threadreaderapp.com/thread/1402151791173672980.html

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> [1/N]
CLEARING UP THE SAYLOR FUD
As BTC plunges, expect massive amount of Saylor FUD – that this man will be forced to sell.
The situation is not as dire – let me explain

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>[2/N] The latest bond issuance will only be senior secured on the BTC that he plans to accumulate on the proceeds from this issuance.
I.E – Even if this 400M bid fails to support the market and there is liquidation – the 92,079 of BTC held will *NOT* be at risk.

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>[3/N] Lets take a further look at his capital structure – in particular the debt component.
He has 2 currently outstanding bonds – One is a zero coupon 2027 Maturity Convertible bond, the other is a 0.75% coupon 2025 Maturity Convertible bond

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>[4/N] This is the information on both bonds:
Only the 2025 bond requires interest to be paid on it.
The outstanding amount is 650M – This is 0.75% of interest paid S/A – I.E – the annual interest payment is only 4.875M and each time is 2.4375M

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>[5/N] Their main business makes about ~50M in net profit – basically, Saylor makes enough money to cover the annual interest by 10X.
– This means that from now till 2025 at least, Saylor CANNOT be liquidated as long as he pays the interest on the 0.75% 2025 bond.

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>[6/N] **”But oh no! what if the board forces saylor to sell?**
Saylor himself owns 25% of microstrategy but he also owns the majority of Class B shares which have 10x voting power giving him 72% of the voting power. I.E Saylor *CANNOT* be forced by anybody to sell.

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>[7/N] Don’t take my word for it though.
Go to their annual report : https://www.microstrategy.com/content/dam/website-assets/collateral/financial-documents/financial-document-archive/2020-annual-report.pdf
(On page 32)

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>[8/N] **In conclusion;**

>**1. The latest round of purchase will not have the ability to liquidate his previous holdings**

>**2. The interest payment on his bonds CANNOT liquidate him**

>**3. Nobody has the power to force him to sell. At All.**

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>[END] Truth is, Saylor has way more diamond hands than you. He took real life leverage that cant get him liquidated while you took leverage on a 100 vol asset using the underlying as collateral.
He rode his stock from 3130 to 11 USD [-99.6%] and survived. This is a blip.



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9 Comments

  1. If I hold MSTR stock, I would sell it. Although, I appreciate the support for Bitcoin, but MSTR is not in the speculation and investing business.

    Not unless, they are planning to sell a price analysis software and the recent “seemingly” speculative investment is guided by their software, the motivation does not make sense.

What do you think?

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