Bloomberg: How much Bitcoin does MicroStrategy currently hold?

By Olga Kharif, Tom Contiliano, Bloomberg; Compiled by Tao Zhu, Golden Finance

Michael Saylor’s decision to start buying Bitcoin in 2020 has paid off handsomely for the MicroStrategy Inc. co-founder and executive chairman this year.

From January to last week, Saylor reaped about $400 million from pre-planned daily sales of about 5,000 shares of the enterprise software company, according to data compiled by Bloomberg. The stock sales followed the exercise of expiring options granted in 2014. The stock has doubled this year to around $1,290, outpacing the original cryptocurrency’s record gains over the same period. MicroStrategy’s shares traded at about $160 at the end of 2014.

The outperformance of Tysons Corner, Virginia-based MicroStrategy’s stock appears to have allayed investor concerns that controlling shareholder Saylor might sell at the peak. On a conference call in November, Saylor noted that he had been paid just $1 in salary for more than a decade and was not eligible for any cash bonuses. He said at the time that exercising the option would allow him to meet some obligations and buy more bitcoin for his account.

“I think the coverage in the media is more important than the coverage among investors,” said Lance Vitanza, managing director at TD Cowen, which has a “buy” recommendation on MicroStrategy. “Investors recognize that Saylor still owns a lot of stock.”

Even so, MicroStrategy’s premium to bitcoin has begun to attract attention since the launch in January of a U.S. exchange-traded fund that can hold the cryptocurrency. In March, Kerrisdale Capital Management LLC said it was shorting the stock because its gains have outpaced gains in digital asset prices.

“The big question for me is, why would you buy MSTR at a premium to spot when you could just buy the ETF right now?” said Austin Campbell, an adjunct professor at Columbia Business School and an advisor to blockchain companies. MicroStrategy “is a magic belief stock, just like PLTR, TSLA or GME. They tend to go against fundamentals and trade purely on sentiment. That may continue for a while, but it won’t be forever.”

Meanwhile, MicroStrategy said Monday it lost $53 million in the first quarter after taking an impairment adjustment on the value of its bitcoin holdings, even as cryptocurrencies surged during the period.

Under current accounting rules, MicroStrategy can’t recognize any increases in its bitcoin holdings, such as a nearly 67% increase in the most recent quarter. That’s changing with a recently passed accounting rule that requires digital assets to be valued at market prices. Companies have until 2025 to implement the revisions. MicroStrategy did not adopt the first quarter revisions, instead recording a $191.6 million impairment loss on digital assets.

The value of MicroStrategy's bitcoin holdings has grown to about $13.5 billion since the company began buying digital assets as part of its efforts to hedge against inflation.

The company's bitcoin cache has increased by 25,250 since the end of the fourth quarter. MicroStrategy said it held 214,400 bitcoins as of April 26.

“Saylor has a simple strategy for MSTR: sell equity/debt and use the proceeds to buy BTC,” said Jeff Dorman, chief investment officer at digital asset management firm Arca. “As BTC goes up, MSTR stock goes up, so MSTR can sell more equity/debt and repeat the same process over and over again.”