hey matt i just want to say that i love watching your videos and especially when they are focused on the stock market and finance topics such as NAV/dilution. Hope to see more of these in the future instead of only crypto as your knowledge in the finance sector is formidable
Thank you, Matt. Your explanation was very clear. Contrary to what many commentators suggest, issuing bonds when the Net Asset Value (NAV) is above 1 is sound financial practice. The CFO of MSTR and Sailor are particularly compelled to do this, especially since their bond offerings were quickly oversubscribed. Additionally, purchasing convertible MSTR bonds is a sensible strategy, as these investors are savvy enough to short the stock simultaneously. This approach provides them with well-defined risks: if MSTR’s stock price increases, they profit potentially without limits; in the worst-case scenario, they recover their investment minus the cost of the short position. Interestingly, airlines employed a similar strategy in the mid-1990s when interest rates were around 3% and their profit margins exceeded the interest paid. Unlike airlines, which faced limited upside due to market share constraints, MSTR's scheme has no apparent upside limit as long as the NAV remains above 1. I am curious whether any company has implemented a comparable strategy for gold.
It will not age like milk. He might be lucky that it's not only him driving BTC price (I assume BTC is already bigger then him), but there is no reason to buy his toxic stock. Thanks again for explaining!!
Great content! This helps us understand that the key factor in increasing BTC/MSTR shares lies in trading above a >1 mNAV. MSTR achieves this by packaging BTC’s volatility into various financial products that attract demand. This strategy keeps its mNAV above 1, allowing the company to recycle funds to purchase more BTC. The larger MSTR grows, the more funds it amasses, amplifying its positive impact on BTC's price. Once the genie is out of the bottle, it’s hard to stop, as it continues to draw liquidity from the market to nurture the stock's valuation.
Great video, Matt. I really enjoy these technical videos. MSTR has been a mystery. Finally, I am beginning to understand it. Can't wait for tomorrow's video.
Hello, why someone would buy MSTR? I mean why buy microstrategy if mnav above 1 and not buy BTC directly? I don't think that only buying btc is the only strategy . I am just interested to understand your perpuse. Is it a long term investment or a quick situational trade? From the video example with 3.000$ you would get 0.03 btc or you will get 10MSTR shares "corresponding" to 0.2 btc . that was good for the previous investors doubling their btc per share ,but not for you. You may answer freely , I am really just curious about it.
@@miskas123456789 Because buying 1btc and keeping it yourself, does not make the 1BTC go and make little Bitcoin babies, such that you in 10 years now have 4 BTC. But Saylor promises to increase the BTC per share you have. This is literally like your stocks making BTC babies for you.
@@miskas123456789 Because buying 1btc and keeping in yourself, does not make the 1BTC go and make little Bitcoin babies, such that you in 10 years now have 4 BTC. But Saylor promises to increase the BTC per share you have. This is literally like your stonks making BTC babies for you.
With CBs, what if the share price happens to be below the strike because of a BTC bear market of -70% to -85%? Gotta repay CBs in FIAT--> firesale BTC in bear market? MSTR stock would tank massively?
You should make a video about OTC desks, how can microstrategy buy 5bil worth of BTC and the price does nothing? Is it because OTC desks trade p2p? Would love if you explained this in more detail
Thank you, Matthew. While MSTR's purchases of BC have added to the increased price of BC, does the same hold true in reverse? What happens if Saylor decides to sell off large amounts of BC?
Very clear explanation. Thank you. I wish had gotten in when the multiple was less than 1. What do you estimate is a fair multiple based on accretion? I understand the bond issuance enjoys much institutional demand.
Great video. Could I ask what are the risk with such strategy? It seems Saylor keep levering debt to buy BTC, what would happen in a black swan even like Covid 2020 and the price drops 40%? There is a liquidation for Saylor's strategy? Or worse, what if the US Gov decides to confiscate the BTC to protect the USD?
What is crazy to me is the more companies that deploy this strategy, the more they gain in market share without hurting each other, instead helping one another. Eventually companies not using bitcoin backed treasuries will be un-investable as they will get less and less ETF passive flows. I know that sounds CRAZY, but if 5 companies are doing this, they will absorb more and more capital, then 10, then 20, it will make the rest of the companies look like zombies that avoid using this strategy, even high cash flow companies unless they can consistently clear 30% growth rates to match Bitcoins average going forward. Very few companies can grow that fast and wall street rewards growth. The upcoming FASB rule change is going to make companies like MSTR and SMLR look amazing to the algos. The S&P 500 is going to turn into companies that have bitcoin treasuries. I cannot believe we can front run this eventuality.
Matthew, In mid December the FASB accounting rule for crypto changes to market value versus lowest price during the year. this would double MSTR asset value? what are you thoughts?
Sorry, the video is on point, I do get it now. I mistakenly thought you were making a side-by-side comparison of mNAV >1.0 versus mNAV < 1.0 situations. But in the former case there would be no discount to the BTC value held in the balance sheet. - which is the situation right now, in fact.
The beauty is that IF it ever get's below NAV, people can load up on MSTR shares or call options, THEN load up on BTC and pump it. Buoy Effect. EZ MONEY.
i was wondering about miners and their rewards, what is your take on what happens with miner revenues couple cycles from now, in case btc becomes global trade asset? Recently we've had heavy transactional demand due to inscriptions around block 840,000 - where tx reward spiked to like 10-20-30 BTC, do you think it's safe to assume that with increased adoption, miners will be eventually earning 2~5~10~20 btc per block? There are lots of big boys who will want final settlement. i mean.... that could be an *insane* increase in revenue, because not only BTC grows itself in price, but they will be getting much more tx reward per block. So while everybody expects diminishing returns from miners due to constantly halved block rewards, i assume that in case of serious demand, miners will heavily outperform - and in that scenario they will grow at faster rate than companies like MSTR, which will eventually lose some steam. Right now though, MSTR seems to be a winner of this race in forseeable future. For now it's a battle of money, but later it'll be a battle of energy to get btc
The one step that doesn't make sense to me is: he issues another 10 shares at $300 per share...but the market just absorbs a doubling of shares without any price reduction? I.e. you pointed out that when he purchased more Bitcoin, it increases the price of Bitcoin. But when he issues more shares...it doesn't push down the price of his shares....?
He uses the shares to buy more bitcoin. The price actually rises. This is the part that confuses everyone. Normally you would be right but if you follow Matt's numbers you will see it is accretive, not dilutive. He just held the price constant to make the math simple.
@@jamesthompson3099 Exactly. It would be like a regular company issuing more shares than instantly acquiring more valuable assets or producing more of a product or service that is quickly sold and ads revenue to the business. That's not typical. Usually if a company issues more share they are using that money to pay down existing debts, cover losses, or invest in new capital that takes months or years to produce something that ads revenue to their balance sheet so the value per share is decreased in the short term putting downward pressure on their stock price. Microstrategy on the hand is taking those shares and instantly buying more of an appreciating asset delivery real short term value to each share holder and also long term if you think Bitcoin will continue to appreciate, like most Bitcoin enthusiasts believe will happen and want to happen.
So what's drawing institutions to microstrategy is it the low interest rate that sailors getting primarily or is it a combination of that plus the Bitcoin holdings as collateral? Or is it the speculation of something greater for MSTR. Such as a Bitcoin bank.
A lot of the demand comes from institutional investors who are only allowed to buy things like convertible bonds. They're not allowed by their mandates to buy BTC or IBIT
@Bitcoin_University so according to Fred Krueger he thinks the the convertible bonds will be unavailable and it will be a giant problem if there's a large bear market. Possibly the end of MSTR.
If he manages to accumulate 2m bitcoin (currently close to 400k and and its reasonable to assume he will add 200k per year) until bitcoin reaches 1m usd per coin (expected around 2033) and assuming mnav of 5, microstrategy will be a 10T market cap company. Definitely will be in top 3 globally by market cap, if not the biggest. Nvidia or Apple needs to grow north of 30% every single year on average to catch their valuation.
Their premium will go down the more bitcoin they get. You are imagining a scenario where MSTR have more than 10% of total BTC, which is a lot. Imagine theoretically that MSTR holds 100% of the total BTC, then it no longer makes sense for them to have a premium.
Get advanced Bitcoin education here:
www.bitcoinuniversity.com/join
Great time to review #ftx_collapse and what Michael Saylor had to say about that 😊😊
Been trying to make sense of this paradox for weeks, and you’re the first person to explain it simply. Thanks
He's just the best
Thanks for giving people something to think about with MSTR. I'm looking forward to Part 3.
Thanks for watching and commenting
Amazing. You'll never see these type of high quality deep dives from 'crypto channels'.
Great video. I am now eagerly awaiting the 3rd part : The return of the Microstrategy shareholders
I was procrastinating it so now I can binge watch the vids lol
Can’t wait for part 3, Matthew. So helpful!
Thank you
This is so good! I know for you Matthew it is basic stuff, but for me it gets my heart pumping and the neurons in my brain firing. Thank you!
Part 1 was good part 2 even better. Ready for the next one Matthew. Simplified perfectly.
Nice to see someone who actually understands this company instead of screaming that it shouldn't be trading at a premium over NAV. Great video 🙂
I can’t wait for part 3! Thank you so much for your contributions.
Light in the dark of MSTR jungle - many thx to the sharp mind
Thank you for all that you DO MK !!! ….. true champion ….
Thanks for your support of the channel as well!
Thanks
Thanks so much for your support!
Thank you so much for explaining this so clearly Matthew. As always, you don’t disappoint with an excellent video.
Thanks
Amazing time to be alive and see this real time!😊
Thank you so much!! I listen to so many people talking about this subject but didn’t understand really the debates about mstr. Now I do!! Thank you
hey matt i just want to say that i love watching your videos and especially when they are focused on the stock market and finance topics such as NAV/dilution. Hope to see more of these in the future instead of only crypto as your knowledge in the finance sector is formidable
Matthew, you are an exceptional teacher. Just superb!
thank you
Thank you, Matt. Your explanation was very clear. Contrary to what many commentators suggest, issuing bonds when the Net Asset Value (NAV) is above 1 is sound financial practice. The CFO of MSTR and Sailor are particularly compelled to do this, especially since their bond offerings were quickly oversubscribed. Additionally, purchasing convertible MSTR bonds is a sensible strategy, as these investors are savvy enough to short the stock simultaneously. This approach provides them with well-defined risks: if MSTR’s stock price increases, they profit potentially without limits; in the worst-case scenario, they recover their investment minus the cost of the short position. Interestingly, airlines employed a similar strategy in the mid-1990s when interest rates were around 3% and their profit margins exceeded the interest paid. Unlike airlines, which faced limited upside due to market share constraints, MSTR's scheme has no apparent upside limit as long as the NAV remains above 1. I am curious whether any company has implemented a comparable strategy for gold.
It will be interesting to see check back on these series after some years.
Yes, hopefully it doesn't age like milk
@Bitcoin_University I want to think Micheal is an honest man but you can never be sure. Many have failed us in the past. I wish everyone well tho
It will not age like milk. He might be lucky that it's not only him driving BTC price (I assume BTC is already bigger then him), but there is no reason to buy his toxic stock. Thanks again for explaining!!
Thanks Matt, brilliant breakdown as always. Looking forward to part 3!
Great content! This helps us understand that the key factor in increasing BTC/MSTR shares lies in trading above a >1 mNAV. MSTR achieves this by packaging BTC’s volatility into various financial products that attract demand. This strategy keeps its mNAV above 1, allowing the company to recycle funds to purchase more BTC. The larger MSTR grows, the more funds it amasses, amplifying its positive impact on BTC's price. Once the genie is out of the bottle, it’s hard to stop, as it continues to draw liquidity from the market to nurture the stock's valuation.
Echoing what's already been said but I'm already looking forward to part three.
Thanks again Matt
wow, This is the most helpful video I have ever seen this far on how Microstrategy is operating, Thank you so much
Thank you. Be sure to check out today's video as well:
th-cam.com/video/_FyeXjqpBhw/w-d-xo.html&ab_channel=BitcoinUniversity
Excellent tutorials. Well explained! Looking forward to Part 3
Camping for part 3!
Same
You are the smartest person I've ever listened to.
Great video, Matt. I really enjoy these technical videos. MSTR has been a mystery. Finally, I am beginning to understand it. Can't wait for tomorrow's video.
What’s a fair mnav ?
Damn, I have no intelligent comment yet. I'll await part 3
No worries-- there's a lot to absorb. It's beginning to make my head hurt as well
As usual a great video. Thank you Mark. Looking forward for tomorrows video.
Thanks for doing this Matthew!
Enjoyed the video today and look forward to the next one!
Could not ask for anyone better to explain this! Apart from the GOAT himself
I just bought a few more shares of $MSTR sub $400 in my roth IRA. 😎👍
Smart move.
Im loaded in my pension too. Wont be touched for 20 years.
Pretty sure we both know what that will have done to MSTR`s value by then :)
Hello, why someone would buy MSTR?
I mean why buy microstrategy if mnav above 1 and not buy BTC directly? I don't think that only buying btc is the only strategy . I am just interested to understand your perpuse. Is it a long term investment or a quick situational trade?
From the video example with 3.000$ you would get 0.03 btc or you will get 10MSTR shares "corresponding" to 0.2 btc .
that was good for the previous investors doubling their btc per share ,but not for you.
You may answer freely , I am really just curious about it.
@@miskas123456789 Because buying 1btc and keeping it yourself, does not make the 1BTC go and make little Bitcoin babies, such that you in 10 years now have 4 BTC.
But Saylor promises to increase the BTC per share you have.
This is literally like your stocks making BTC babies for you.
@@miskas123456789 Because buying 1btc and keeping in yourself, does not make the 1BTC go and make little Bitcoin babies, such that you in 10 years now have 4 BTC.
But Saylor promises to increase the BTC per share you have.
This is literally like your stonks making BTC babies for you.
@@miskas123456789 test
Thank you so much for these MSTR vids Matt👍🏻🇦🇺
Great content! Subscribed. Definitely here to understand the convertible aspect.
Commenting for the algorithm, so this video will be recommended to other viewers ☺️
Thanks, I appreciate that
This is great! Thank you so much for this breakdown!
like watching a series , leaves us at an interesting point that compells us to watch the next episode :)
thanks for sharing your analysis
Great explanation. Look forward to the next video.
Great job explaining MSTR…😊
I’m loving this!!!!
Part 3 would be nice. Maybe more details on how the convertible bonds are offered, and to whom, and redeemed.
Amazing content. We need all these explanations to make sure investors make the right decision. Simple explanation of a complex subject . Well done ❤
Thank you, Thank you, Thank you.
Thank you for your work Matthew. Legend
Thanks for your support and kind words
Hi Matt - do you mind doing a video on recommended bitcoin node setups?
This is great, I love deep dives on stocks like this. Thanks!
Thank you !
Question : do you know if one company has ever done that with gold ? Simple interrogation.
An eye-opening analysis
I made a 50% gain in MSTR (dumb luck), but the price swings are too exhausting. I’m going back to just BTC.
Great video!
Tnx for both parts Matt🎉
Absolutely excellent explanation
Tomorrow can you go over what would cause a unwind / failure of strategy and your thoughts on the likelihood? Thank you
I've got a hunch that that might be a part 4 or even 5 🙂
With CBs, what if the share price happens to be below the strike because of a BTC bear market of -70% to -85%? Gotta repay CBs in FIAT--> firesale BTC in bear market? MSTR stock would tank massively?
Thanks Matt. That simple math cleared up my question. 👍
You should make a video about OTC desks, how can microstrategy buy 5bil worth of BTC and the price does nothing? Is it because OTC desks trade p2p? Would love if you explained this in more detail
I cover OTC desks here:
th-cam.com/video/djWyrPZf6gI/w-d-xo.html&ab_channel=BitcoinUniversity
That will be great if you can talk about the risk, when this model will fail? Thanks in advance.
Thank you, Matthew. While MSTR's purchases of BC have added to the increased price of BC, does the same hold true in reverse? What happens if Saylor decides to sell off large amounts of BC?
Great Matt. Keep it up!👍
Great vids mate
Very clear explanation. Thank you. I wish had gotten in when the multiple was less than 1. What do you estimate is a fair multiple based on accretion? I understand the bond issuance enjoys much institutional demand.
Great video. Could I ask what are the risk with such strategy? It seems Saylor keep levering debt to buy BTC, what would happen in a black swan even like Covid 2020 and the price drops 40%? There is a liquidation for Saylor's strategy? Or worse, what if the US Gov decides to confiscate the BTC to protect the USD?
Great work, thank you!
What is crazy to me is the more companies that deploy this strategy, the more they gain in market share without hurting each other, instead helping one another. Eventually companies not using bitcoin backed treasuries will be un-investable as they will get less and less ETF passive flows. I know that sounds CRAZY, but if 5 companies are doing this, they will absorb more and more capital, then 10, then 20, it will make the rest of the companies look like zombies that avoid using this strategy, even high cash flow companies unless they can consistently clear 30% growth rates to match Bitcoins average going forward. Very few companies can grow that fast and wall street rewards growth. The upcoming FASB rule change is going to make companies like MSTR and SMLR look amazing to the algos. The S&P 500 is going to turn into companies that have bitcoin treasuries. I cannot believe we can front run this eventuality.
That's interesting, thanks for sharing your thought. It might really happen!
Thank you Sifu.
Part 4 should be the various scenarios where the U.S. govt. seizes MSTRs BTC holdings.
How dumb 😂
Did you know BlackRock owns a large part of MSTR?
Do you know the power these guys have?
You should probably rethink your position.
Thank you, Matthew.
Thanku these are so helpful!
hi matt, you forget to ask us to Like in the middle of the video.
First company to actually report revenue / added value in Bitcoin terms. Refreshing to have to think less in melting ice cube terms.
Matthew, In mid December the FASB accounting rule for crypto changes to market value versus lowest price during the year. this would double MSTR asset value? what are you thoughts?
Love this deep dive
Great video! Just wanted to check - At 8:16 you mean mNAV > 1.0 right?
No, less than one is correct. An mNAV less than one lets you buy at a discount to underlying.
mNAV< 1.0
Sorry, the video is on point, I do get it now.
I mistakenly thought you were making a side-by-side comparison of mNAV >1.0 versus mNAV < 1.0 situations. But in the former case there would be no discount to the BTC value held in the balance sheet. - which is the situation right now, in fact.
Thanks for the great video!
Fantastic topic!
Thanks Matt
The beauty is that IF it ever get's below NAV, people can load up on MSTR shares or call options, THEN load up on BTC and pump it. Buoy Effect. EZ MONEY.
Now I want Pumpkin pie
Me too
😂🤣😂🤣😂🤣😂🤣😂🤣
Thank you
Keep it going!
Michael claims he will only make moves that benefit the shareholders.
He's one of the biggest shareholders himself so that makes sense
i was wondering about miners and their rewards, what is your take on what happens with miner revenues couple cycles from now, in case btc becomes global trade asset?
Recently we've had heavy transactional demand due to inscriptions around block 840,000 - where tx reward spiked to like 10-20-30 BTC,
do you think it's safe to assume that with increased adoption, miners will be eventually earning 2~5~10~20 btc per block?
There are lots of big boys who will want final settlement. i mean.... that could be an *insane* increase in revenue, because not only BTC grows itself in price, but they will be getting much more tx reward per block.
So while everybody expects diminishing returns from miners due to constantly halved block rewards, i assume that in case of serious demand, miners will heavily outperform - and in that scenario they will grow at faster rate than companies like MSTR, which will eventually lose some steam.
Right now though, MSTR seems to be a winner of this race in forseeable future.
For now it's a battle of money, but later it'll be a battle of energy to get btc
why would mstr ever trade at mnav below 1?
Still waiting for a reply
Thanks Matt.
Looking forward to the day I can buy MSTR direct on blockchain.
Thank you for the video Mathew, QQ, why does it feel like what they are doing is a Ponzy Scheme? And if it feels that way, is it?
Thx Matthew
Great, thank you!
Thanks Matthew 👌
The one step that doesn't make sense to me is: he issues another 10 shares at $300 per share...but the market just absorbs a doubling of shares without any price reduction? I.e. you pointed out that when he purchased more Bitcoin, it increases the price of Bitcoin. But when he issues more shares...it doesn't push down the price of his shares....?
He uses the shares to buy more bitcoin. The price actually rises. This is the part that confuses everyone. Normally you would be right but if you follow Matt's numbers you will see it is accretive, not dilutive. He just held the price constant to make the math simple.
@@jamesthompson3099 Exactly. It would be like a regular company issuing more shares than instantly acquiring more valuable assets or producing more of a product or service that is quickly sold and ads revenue to the business. That's not typical. Usually if a company issues more share they are using that money to pay down existing debts, cover losses, or invest in new capital that takes months or years to produce something that ads revenue to their balance sheet so the value per share is decreased in the short term putting downward pressure on their stock price. Microstrategy on the hand is taking those shares and instantly buying more of an appreciating asset delivery real short term value to each share holder and also long term if you think Bitcoin will continue to appreciate, like most Bitcoin enthusiasts believe will happen and want to happen.
love your video
🐐🐐🐐
So what's drawing institutions to microstrategy is it the low interest rate that sailors getting primarily or is it a combination of that plus the Bitcoin holdings as collateral?
Or is it the speculation of something greater for MSTR. Such as a Bitcoin bank.
A lot of the demand comes from institutional investors who are only allowed to buy things like convertible bonds. They're not allowed by their mandates to buy BTC or IBIT
@Bitcoin_University so according to Fred Krueger he thinks the the convertible bonds will be unavailable and it will be a giant problem if there's a large bear market. Possibly the end of MSTR.
@Bitcoin_University thank you that helps me see why they want the bonds
Tnx
If he manages to accumulate 2m bitcoin (currently close to 400k and and its reasonable to assume he will add 200k per year) until bitcoin reaches 1m usd per coin (expected around 2033) and assuming mnav of 5, microstrategy will be a 10T market cap company. Definitely will be in top 3 globally by market cap, if not the biggest. Nvidia or Apple needs to grow north of 30% every single year on average to catch their valuation.
Their premium will go down the more bitcoin they get. You are imagining a scenario where MSTR have more than 10% of total BTC, which is a lot. Imagine theoretically that MSTR holds 100% of the total BTC, then it no longer makes sense for them to have a premium.
Thanks Matt!
Great content
0:00 "This is Mathewwwwwwwwwww Kratter's..... "