@michael_saylor is very astute as he just took advantage of the favorable market conditions of #Bitcoin and the low interest rate environment to have $MSTR issue 5-year convertible senior notes of up to $460M to buy more $BTC. A great win for $MSTR:
microstrategy.com/en/company/com…
microstrategy.com/en/company/com…
1/ $MSTR has operating cash flow of $50M/year. The note is ~9x cash flow, but the interest rate should be 3% max so it has ample cash to service the interest payments. It can do interest rate arbitrage by depositing the #Bitcoin into companies like BlockFi.
2/ $MSTR is turned into a $BTC play like the Grayscale Investments’ $GBTC, but even better as it is more like a #Bitcoin #ETF with a tech business but no fees. $MSTR doesn't suffer the premium issue of $GBTC so investors can buy it close to the spot $BTC price. Great attraction!
3/The share price of $MSTR will get a big boost due not to its tech business, but the rising price of #Bitcoin. With a larger market cap, $MSTR can raise capital by issuing shares to buy more $BTC. If the price of $BTC is favorable, this can be repeated in a virtuous cycle.
4/ What if #Bitcoin tanked? $MSTR can sit on its $BTC and wait for $BTC's next bull phase. Stocks go up and down, including $GBTC, but $MSTR has no cash flow issues and its tech business will support its stock price during the $BTC bear cycle.
5/ $MSTR has transformed itself into a quasi #Bitcoin ETF with more retail and institutional following. A long term plus! More companies will see this and mimic $MSTR so this adds to the long-term bullish price action for $BTC.
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