Does Michael Saylor understand that if he issues more debt or equity, that he dilutes the balance sheet value of #mstr, which may lead to selling pressure on the stock, which could result in forced selling of #btc?
Discussion
You were on the right track until you said forced selling of BTC. Saylor has discussed in depth how a margin call is not possible, because that’s now how he set up his operation.
In any case, sats are on sale right now. Let’s stack accordingly. 🚀
Agree. But here is what I was referring to: "Overleveraged companies often face bankruptcy as a last resort to restructure or discharge their debts. This process can result in loss of control over operations and liquidation of assets." Having said that, I haven't looked at #mstr balancesheet, just offering that as a possibilty.
The debt-to-equity (D/E) ratio for MicroStrategy (MSTR) can be calculated using the formula:
Debt-to-Equity Ratio
=
Total Debt
Total Stockholders’ Equity
Debt-to-Equity Ratio=
Total Stockholders’ Equity
Total Debt
From the data for 2024:
Total Debt: $18.226 billion
Total Stockholders' Equity: $9.784 billion
D/E Ratio
=
18.226
9.784
≈
1.86
D/E Ratio=
9.784
18.226
≈1.86
This indicates that MicroStrategy's debt is approximately 1.86 times its equity as of the end of 2024
That is high. Very high.
I think the plan is for more of the same. Just saying he can’t be margin called. Also, buying bitcoin directly is the only way to fly. In case you were considering MSTR.
I dont know what he means by margin called. I think of broker calls on margin on shorted stocks, not on bitcoin owned. If he is referring to loans secured by bitcoin, that is a moot point, since he will have to sell his bitcoin to pay off any loans due, secured or not, or incur more debt, or issue more equity, all which dilute the value of his stock. Currently there is 9 % short interest in the stock, and that data is old. Much higher today I am sure.
He ran minus 1.06 billion dollars in levered free cash flow last 12 months, so his only hope is a fast ramp up in btc, or else he is in deep crap. This is a ponzy scheme, no doubt, built on future sales of appreciating btc. No real cash flow .
He may understand bitcoin, but he definitely doesnt know how to run a business. For all we know, he is the big seller causing the decline in btc. Wouldnt surprise me. Again, he is draining cash in an equity that produces no income. Agree straight btc the way to go.
Are you valuing their bitcoin at $0 in your equity calculation? Their Q2 results will realize the appreciation of their bitcoin treasury holdings as they update their bitcoin accounting to new FASB guidance on bitcoin treasury holdings.
I think that number is too high, after checking with other sources, it was a quick lookup on ai, so it is suspect.
all good. MSTR analyzed without consideration of its BTC treasury makes it look like the worst performing stock out there. Come April that will flip to the most profitable public company in the world.