You probably have heard about Michael Saylor, the founder of MicroStrategy (MSTR), the software company in the US, who became one of the first Corporates who deployed their surplus funds into buying Bitcoin.
Initially, using surplus funds, MSTR purchased:
21454 Bitcoin at a purchase price of $11,652 per BTC – consideration: $250,000,000
19,370 Bitcoin at a purchase price of $11,615 per BTC – consideration: $225,000,000
MSTR then completed a $650m Offering of .75% Convertible Senior Notes Due 2025. The Notes are convertible at approximately $397.99 per share, or convertible into cash, or a combination of both, at MSTR’s discretion.
MSTR then used the proceeds to buy more Bitcoin:
29,646 Bitcoin at a purchase price of $21,925 per BTC – consideration: $650,000,000
In total, MSTR owns 70,470 BTC at an average buy-in price of $15,964.
So, it is not hard to calculate their daily mark-to-market unrealized profit on their BTC holdings. The current BTC price is $USD 49,495. That is a very respectable $2.36 Billion profit.
Prior to the buying of the Bitcoin, the share price was $130 and market capitalization of MSTR was about $1.2 Billion. Add in the current profit on their Bitcoin holdings of $2.36 Billion, the total market capitalisation should be in the region of $3.56 Billion, or $378 per share.
MSTR is currently trading at $1,034 per share or $9.7 Billion. That is more than $6 Billion more than fair value. The current value of MSTR equates the Bitcoin price at $130,000 per BTC.
If you are buying MSTR for their BTC holdings, it is an awfully expensive way of getting BTC exposure. Given the madness of markets, only the foolhardy would consider shorting the shares.