Michael Saylor is playing a different game. A game where conventional wisdom doesn’t apply. His company, MicroStrategy, once a fairly unremarkable software firm, is now the biggest corporate holder of Bitcoin. And people are noticing. Or, more accurately, investing.
- MicroStrategy is now the largest corporate holder of Bitcoin, attracting investors who believe in Michael Saylor’s vision.
- The company plans to sell $21 billion in new shares, an action that typically dilutes stock value, but investors are accepting it.
- This acceptance stems from the belief that MicroStrategy’s Bitcoin purchases will offset the dilution and increase shareholder value.
MicroStrategy announced Wednesday it plans to sell a staggering $21 billion in new shares. For most companies, that’s a recipe for disaster. Dilution usually sends stock prices tumbling. Investors don’t like their ownership stakes shrinking. But MicroStrategy isn’t most companies. Its stock actually *rose* about 1% Thursday, even as Bitcoin’s price dipped. It’s tripled in value this year, surpassing Coinbase as the largest crypto stock. Go figure.
A Unique Breed of Investor
The key? MicroStrategy shareholders aren’t your typical investors. They’re believers. They’re buying into Saylor’s vision: MicroStrategy as a Bitcoin accumulator. “MicroStrategy shareholders are a unique cohort,” explains CoinDesk senior analyst James Van Straten. “Typically, when shareholders get diluted, this is a bad thing. However, as a MicroStrategy shareholder, I celebrate being diluted as I know MicroStrategy are going out and buying bitcoin, which increases the bitcoin per share as a company which is accretive for shareholder value.” It’s a strange loop, but it’s working.
This isn’t just a small raise, either. It’s the largest “at-the-market” equity offering ever – by a factor of four, according to Bloomberg. That means MicroStrategy is selling shares directly to the public, at prevailing prices. It’s a flexible way to raise capital, and in this case, a very lucrative one. Investors are willing to accept the dilution because they believe the Bitcoin purchases will more than offset the impact. It’s a bet on Bitcoin, disguised as a stock investment.
Joe Consorti, head of growth at Theya, calls it an “accretive dilution strategy.” Essentially, MicroStrategy is leveraging the capital markets to buy Bitcoin, diluting shares in the process, but increasing shareholder value through those Bitcoin purchases. It sounds complicated, but the logic is simple: if Bitcoin goes up, MicroStrategy shareholders win, even if their ownership stake is smaller.
Coinbase, meanwhile, is feeling the pinch. The crypto exchange’s stock slumped after a disappointing third-quarter earnings report. While MicroStrategy’s value rises and falls with Bitcoin, Coinbase is subject to the whims of trading volume and market conditions. It’s a stark contrast. One is a pure-play Bitcoin investment vehicle, the other a business dependent on crypto activity. Right now, the market clearly favors the former.
The whole situation is…odd. It defies traditional financial logic. But in the world of Bitcoin, logic often takes a backseat to belief. And right now, investors believe in Michael Saylor’s vision. They’re willing to be diluted, to fund his Bitcoin buying spree, because they think it will pay off in the long run. It’s a gamble, sure. But it’s a gamble they’re apparently happy to take.
