MicroStrategy rides the ‘red sweep’ and rises 477% in 2024 to become top tech stock

the night before micro strategyWhen it debuted on the stock market in June 1998, founder Michael Saylor stayed in a penthouse suite at the Lotte New York Palace in midtown Manhattan. Saylor, then 33, said it was the nicest hotel room he had ever seen, paid for by lead organizer Merrill Lynch.

The next morning, Thaler went to the Nasdaq floor and saw his company’s stock open. He recalled seeing a note scrolling through the ticker warning traders: “Do not confuse MSTR with MSFT.” the latter belonged microsofta major software company that went public 13 years ago.

MicroStrategy’s stock price soared 76% on its debut, joining the parade of tech companies benefiting from the dot-com boom.

“It was a good day,” Saylor told CNBC.

More than 26 years later, MicroStrategy and Microsoft are back together, but for very different reasons. In December 2024, Saylor will stand before Microsoft shareholders and say the company, now valued at more than $3 trillion, should put some of its $78.4 billion in cash, equivalents and short-term investments into its next investment. I tried to convince him. Bitcoin.

“Microsoft can’t afford to miss out on the next wave of technology, and Bitcoin is that wave,” Saylor said in a video presentation published on X last week. This post has been viewed over 3.6 million times.

Thaler was fully committed to that strategy. MicroStrategy has purchased 439,000 Bitcoin since mid-2020, and its stockpile is now worth about $42 billion, increasing the company’s market capitalization to $82 billion, up from about $1.1 billion at the time the plan was implemented. It became the basis for an explosion.

MicroStrategy’s software division, which specializes in business intelligence, generates just over $100 million in quarterly revenue. After booming in 1998 and 1999, the stock price crashed during the dot-com bust, losing almost all of its value. Over the next few decades, it slowly recovered until it skyrocketed under the influence of Bitcoin.

Four years after it started hoarding Bitcoin, MicroStrategy is now the world’s fourth-largest holder, behind developer Satoshi Nakamoto, BlackRock’s iShares Bitcoin Trust, and crypto exchange Binance.

At Microsoft, the shareholder vote supported by Mr. Saylor failed by a wide margin, with less than 1% of investors voting in favor.

But the spectacle provided Saylor, now 59, with yet another opportunity to preach the gospel of Bitcoin and tout the benefits of converting as much cash as possible into that single digital asset. The story is that Wall Street is eating it up.

MicroStrategy stock is up 477% year-to-date as of Friday’s close, making it the runner-up. App Labin Among U.S. tech companies valued at more than $5 billion, according to FactSet data. This will be followed by a 346% increase in 2023.

The rally was in full swing well before November of this year, but the election victory of Donald Trump, which was heavily funded by the crypto industry, further boosted the stock price. The stock has risen 60% since the Nov. 5 election, finally surpassing its dot-com-era high since 2000 on Nov. 11.

Thaler has been talking about Bitcoin in an evangelical manner for years, and in 2022 co-authored a book about Bitcoin titled “What is Money?” But recently, criticism of him has become more intense than ever, portraying Saylor as a cult-like leader whose strategy was to issue bonds and stocks to buy Bitcoin and help MicroStrategy’s stock price rise. It has been described as a “Ponzi loop” in which the company looks at the situation and then does even more. same.

“Wash, rinse, repeat — what could go wrong?” said Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, on Nov. 12. In a post about X to his followers, he wrote:

Saylor, who has 3.8 million followers, addressed the growing voice of skepticism in an interview with CNBC’s “Money Movers” last week.

“Just like the developers in Manhattan, every time the value of real estate in Manhattan increases, they issue more debt to develop more real estate. That’s why buildings in New York City are so expensive. ” Saylor said in the posted clip. X by his legion of fans. “It’s been going on for 350 years. I call it the economy.”

Saylor is a frequent guest on CNBC, appearing on various programs throughout the year. He also agreed to two interviews with CNBC.com, one in September and another shortly after the election.

The first of those conversations occurred on the Lotte train ride back, just a few elevator stops from the penthouse where he had stayed the night before his stock was listed on the Nasdaq. Thaler gave the conference’s keynote speech at the hotel and also attended the conference.

He wore a designer suit and an orange Hermès tie, matching Bitcoin’s designated color. With less than two months to go until the election, crypto companies have begun pledging a more crypto-friendly administration after the Republican candidate and former president, who previously called Bitcoin a “fraud on the dollar,” is pouring money into the Trump campaign.

Two months earlier, in July, President Trump had delivered a keynote speech at the year’s largest Bitcoin conference in Nashville, Tennessee, in which he promised to fire SEC Chairman Gary Gensler, an industry commentator. said it would become the “crypto capital of the world.” If you win with Planet.

“I think the election year was a catalyst for the crypto community to find its own voice, and I think it sparked a lot of latent enthusiasm,” Saylor said in an interview in September. “When Mr. Trump got a preliminary positive result, it was a big boost for the industry. When he got a fully positive result, it was an even bigger boost.”

Until this year, MicroStrategy was one of the few ways many institutions could buy Bitcoin. Because MicroStrategy is a stock, investment companies did not need any special provisions to own it. The landscape changed in January, when the SEC approved the Spot Bitcoin Exchange Traded Fund, allowing investors to buy ETFs that track the value of Bitcoin.

Since Trump’s victory, everything has shifted to the right. Bitcoin rose about 41%, while BlackRock’s ETF rose 39%. Mr. Gensler is preparing to leave the SEC, and Mr. Trump has nominated deregulation advocate and former SEC Commissioner Paul Atkins to replace him.

Venture capitalist David Sachs, who hosted a fundraiser for Trump in San Francisco and is an outspoken conservative, will be the “White House AI and Cryptocurrency Czar,” Trump said in his Truth Social earlier this month. The announcement was made in a post on the platform.

“Bitcoin is skyrocketing with the tailwind of the red sweep, and the rest of the digital assets will start to skyrocket as well,” Saylor told CNBC in a phone interview shortly after the election. He added that Bitcoin remains a “secure transaction” in the cryptocurrency space, but as “digital asset frameworks” are put in place for the broader crypto market, “there will be a surge across the digital asset industry. Deaf,” he said.

“Taxes are coming down. All the rhetoric about unrealized capital gains taxes and wealth taxes is off the table,” Saylor said. “All the hostility from regulators to banks involved in Bitcoin will also disappear,” he added.

MicroStrategy is becoming more aggressive in purchasing Bitcoin. Saylor said in a Dec. 16 post that his company acquired 15,350 Bitcoins for $1.5 billion in six days starting Dec. 9.

So far this year, MicroStrategy has acquired 249,850 Bitcoin, with nearly two-thirds of its purchases occurring after November 11th.

“I was going to do it regardless,” Saylor said of the election results. “But what was a headwind turned into a tailwind.”

A week before the election, MicroStrategy announced plans to raise $42 billion over three years during its quarterly earnings call. This included up to $21 billion in stock sales through financial firms such as TD Securities and Barclays, creating significant liquidity for Bitcoin purchases.

Saylor told CNBC that it was “probably the most significant earnings announcement in the company’s history.”

For Thaler, no amount of ownership is too much. He predicted in September that Bitcoin could reach $13 million by 2045, which would represent 29% annual growth.

In the same TV interview, he compared Bitcoin to real estate in New York, saying, “We just keep buying the highest prices forever.” “Every day is a good day to buy Bitcoin. We see Bitcoin as Cyber ​​Manhattan.”

Mr. Thaler speaks passionately about Bitcoin as the foundation of a new digital economy that will continue to grow. But since his Bitcoin strategy began in 2020, there has been significant pain for investors. The stock lost 74% of its value in 2022 before skyrocketing over the past two years.

Still, he advises companies to emulate his strategy. Microsoft didn’t listen, but Thaler said there are a lot of “zombie companies” whose core businesses aren’t going where their money could be put to better use.

“The traditional advice would be that when you make a transformational acquisition, you realize you need a merger partner. No more. Look for someone to merge with,” Saylor told Lotte in September. spoke. “Bitcoin is a universal merger partner, right? The real appeal of digital capital is that it can fix any company.”

Watch: Full CNBC interview with MicroStrategy CEO Michael Saylor