He is making billions from Bitcoin, and is sweeping Wall Street after him

Michael Saylor’s company does not market required products or services. The only thing thatmicro-strategy (MicroStrategy) under its leadership is selling new shares and debt, at a pace unseen in corporate history. Saylor transfers all the money accumulated from this to Bitcoin, and vows to continue to do so more and more.

MicroStrategy’s stock rose by about 690% in the last year, which puts the (very) active chairman’s holdings of the company, at a rate of about 10% of the shares, at a value of about 9.7 billion dollars. In addition, he personally owns At $1.9 billion in Bitcoin.

Saylor, 59, has emerged as the public face of the latest cryptocurrency craze, amassing nearly 4 million followers on the X Network. To celebrate bitcoin reaching more than $100,000, Saylor hosted a New Year’s Eve party for several hundred members of the crypto community at his waterfront mansion in the area Miami, near his luxurious yacht. Half a dozen dancers dressed in gold appeared in it. Celebrities mingled with super-investors, including Bill Miller, former Legg Mason fund manager; Peter Briger, Chairman of Fortress Investment Group; and Mark Casey, Central Portfolio Manager at Capital Group. The event was broadcast live on YouTube to tens of thousands of Bitcoin fans, moderated by Sailor dressed in a black blazer and a T-shirt with a Bitcoin print.

The enthusiasm for Saylor’s company is so great that it has led to a puzzling situation: Microstrategy owns about $47 billion of Bitcoin, but its market value is about $97 billion. It’s as if its investors pay $2 for a $1 bill! What is no less surprising is that among the major buyers of its shares are sophisticated investors, including the mutual fund powerhouse Capital Group, which held about 8% of the company as of September 30, and Norges Bank Investment Management, Norway’s sovereign wealth fund worth $1.5 trillion, which held About 1% of the company.

Fans say the premium reflects confidence that Saylor is able to continue to generate profits from betting on Bitcoin. The threshold of mining only 21 million coins creates a scarcity that increases its value. By issuing highly leveraged equity, and selling debt on company-friendly terms, Saylor can generate value for shareholders. That’s as it expands MicroStrategy’s “Bitcoin community,” says Richard Bayworth, a partner at SYZ Capital, who owns MicroStrategy stock personally.

“The premium is justified and it will always be there,” is convinced Jordi Visser, a long-time Wall Street veteran who worked at Morgan Stanley and recently bought Microstrategy shares. “No company can do what they did. They hold about 2% of Bitcoin – who can hold more than that?”.

Saylor’s strategy involves serious risk. He rode the waves of past investment fads until they crashed ashore and lost billions of dollars of his personal fortune, sometimes in a single day. He himself refused to respond to this article.

The happy bubble days

Saylor, a perpetual bachelor who turns 60 next month, has experienced a series of career setbacks and run-ins with financial and other authorities. Last year, he agreed to pay $40 million to settle an income tax dispute with Washington, D.C. authorities, after Washington officials claimed that he had previously lived in the state, and not in Florida or Virginia as he claimed, and was therefore subject to taxes.

Saylor is the son of a regular Air Force officer, studied aeronautics and science at the Massachusetts Institute of Technology and was part of the Air Force Reserve Officer Training Corps. In 1989, a few years after graduating, he founded MicroStrategy in Virginia with friends from college, as a data mining software company.

MicroStrategy took off during the dot.com bubble of the late 1990s. With a value of about $10 billion, Saylor’s company had plenty of cash for lavish parties and Caribbean cruises for employees and associates. She also purchased domain names including Mike.com, Michael.com, Hope.com and Voice.com, and later sold them for $30 million.

It all came crashing down in 2000 when the Internet boom exploded. MicroStrategy was forced to re-report its revenue and profits as regulators scrutinized the industry’s way of recording revenue. The failure was so dramatic that it caught the attention of the tabloids, and in March of that year the New York Daily News published the headline: “Lost $6 billion in one day,” with a picture of the 35-year-old Sailor, clean-shaven in a suit and tie, looking confused on his face

Later that year, Saylor and two other executives, along with the company, paid 11 million dollars to settle a claim for accounting fraud filed by the US Securities and Exchange Commission (SEC). According to the SEC, the company re-inflated the revenues and profits in the reports, and presented profits instead of losses, accusations that Saylor and the others neither admitted nor denied.

In July 2002, MicroStrategy shares traded at 45 cents, down from a high of $313 in 2000, as the company grappled with debt problems. Asked over lunch in New York by venture capitalist Rick Rickertsen if he was worried about losing his business, Saylor replied: “It might. But I’ll just start something new.”

Saylor refinanced Microstrategy’s debt and did a reverse stock split of 10 to 1, thus preventing a crisis. For years he was looking for the next big thing. For a time, Saylor made personal profits from betting on stocks such as Google and Apple, but expressed disdain for cryptocurrencies and in 2013 even tweeted that “Bitcoin’s days are numbered”.

He sat at home and looked for a purpose for the cash

By 2020, MicroStrategy shares had barely moved in years and reflected little growth. The company was worth only $1.5 billion, although it was profitable and boasted a cash balance of about $500 million.

During the 2020 coronavirus pandemic, Saylor spent a lot of time at his Miami mansion trying to figure out what to do with the company’s cash. Fearing a potential increase in inflation, as the government spent money to keep the economy afloat, he studied Bitcoin in depth. Thus he became a believer. Saylor pitched the idea to MicroStrategy’s board of directors to use cash to buy bitcoin. They agreed, mainly because there were no better alternatives for the company at the time. They hoped that with this bet they would at least attract attention that could benefit them.

“The company reached a dead end, almost no one followed it on Wall Street,” says investor Rickertsen, who became a board member.

In the same year Saylor spent about 250 million dollars, half of the company’s funds, on the purchase of Bitcoin at a price of about 11 thousand dollars per coin. He also added more than $100 million of his own money. Immediately after that, the price of Bitcoin dropped to $9,000, and Microstrategy gained about $40 million.

“Most of us on the board said, ‘Oh my God, what have we done? We’re all going to be sued,'” Rickertsen recalled. “Mike (Saylor) was also concerned.”

The panic did not last long. Bitcoin began to climb, and ended 2020 worth over $26,000 per coin. MicroStrategy borrowed several billion dollars to purchase even more bitcoins, at one point relying on a $205 million loan at a floating rate of 8.27%—challenging terms at the time.

Then came the FTX crypto exchange crash at the end of 2022. Bitcoin dropped below $17k and Microstrategy stock dropped to about $17. Since the base cost of the bitcoin held by the company was around 30 thousand dollars, on paper it recorded losses. Rumors spread that the company was in trouble. Saylor and the company upped the ante: they took advantage of the difficulties encountered by the lending bank Silvergate, which was also affected by the crypto, to buy back the $205 million loan for $161 million.

The stock began to soar as Saylor ramped up his strategy of selling equity and debt to buy bitcoin, and as the currency climbed. In 2024 alone, MicroStrategy brought in $23.2 billion from the sale of stocks and bonds, one of the largest “spoil accumulations” by a company in a single year, according to Mark Palmer, an analyst at the investment bank Benchmark.

A “back door” to investing in crypto

When Saylor introduces the company, he may sound simplistic and repetitive and sometimes even hesitant. But he is always devout in his belief in Bitcoin and preaches its praise. He emphasizes that the currency has a limited supply, unlike the dollar or even gold. A fact that helps Bitcoin to be more successful as a hedge against inflation, according to Saylor. He also says that the digital nature of bitcoin makes it easier for holders and cheaper to store and use, eliminates the need for middlemen and makes it a “revolutionary” form of money.

Some mutual funds and other funds have internal guidelines that prevent them from buying bitcoin or even ETFs on the currency, so MicroStrategy shares are a backdoor for them to bet on bitcoin. There are even some large, conservative investors who see the stock as a potential way to gain an edge over competitors who are reluctant to wallow in a crypto company.

Saylor has proven adept at creating various types of equity and debt investments—rolling bank loans, convertible bonds, common stocks, and more—to keep the cash flowing.

“His genius is in producing different products for different audiences,” says Bret Messing, a senior executive at SkyBridge Capital, which manages funds with significant exposure to Bitcoin and advises a fund that owns Microstrategy shares.

Over the past month, Saylor has been promoting microstrategy and Bitcoin on high-profile TV shows and podcasts, at industry conferences and elsewhere. “If you don’t buy Bitcoin when it’s doing well, you’re leaving money on the table,” he tweeted recently.

The unlikely horror scenario

“He’s pretty bombastic in public, but more refined in private,” says Matt Hogan, chief investment officer of crypto asset manager Bitwise, who heard Saylor speak at a dinner for 12 investors last summer. His company manages an ETF that owns Microstrategy.

If Bitcoin continues to rise, the premium represented by Microstrategy stocks may continue to exist. If Bitcoin falls, the stock will likely fall with it. Even if the premium dissipates, but Bitcoin holds on, stocks will likely suffer. Instruments that share certain similarities, such as closed-end funds, often trade at a discount to their holdings, rather than a premium, skeptics point out.

However, society may not face an existential threat. Microstrategy currently has $7.26 billion of unsecured debt, most of it sold at super low interest rates. And it holds – or HODLs (Hold on for Dear Life), in the parlance of Bitcoin enthusiasts – 450,000 coins at an average cost of about $62,000 each. Bitcoin will have to drop below $16,000 and stay Around this level at the time of repayment of the debt in question, so that the Bitcoin held by the company will be worth less than its debt.

A little over a week ago, Saylor revealed a brand new way in which MicroStrategy will raise money from investors to fuel its Bitcoin purchases. He announced that the company will sell $2 billion worth of preferred stock this quarter. The news prompted Palmer, the Benchmark analyst, to set a target price of $650 per share for the stock, which is about 65% higher than current levels.