MicroStrategy shares are the best alternative to Bitcoin-based exchange-traded funds (ETFs), since there are no fees for acquiring and holding the securities, he said in an interview with Bloomberg.
“If you are looking for a leveraged bet on Bitcoin with spot exposure and positive returns, MicroStrategy is the only worthy player,” he said.
According to Saylor, even spot ETFs, which the US Securities and Exchange Commission has not yet approved, may be less attractive than investing in MicroStrategy. He explained that, as an operating company, the latter can generate additional earnings per share.
On February 1, MicroStrategy published its financial results for Q4 2021. For the period, revenue stood at $134.5 million, while operating expenses reached $248 million. The latter includes impairment losses on digital assets, which exceeded $146 million.
MSTR shares reacted negatively to the report. On February 2, during the pre-market period, the securities fell by 6%. After the main session and the trading day on February 3, the shares were not able to recover the losses.
At the time of writing, MSTR was trading near $350.
Despite the losses from holding digital assets, MicroStrategy intends to continue increasing its positions in Bitcoin. Saylor stressed that the company will not abandon this strategy.
According to him, in 2021 MicroStrategy generated about $90 million in free cash flow. It uses this to pay down debt and acquire additional cryptocurrency. The company is also considering alternative methods for large purchases.
“Probably the most compelling and interesting is earning income from 111,000 BTC that are currently unpledged, or obtaining a loan secured by this cryptocurrency, and then reinvesting the funds into new bitcoins,” Saylor said.
He added that the company has not yet made any decision, and any plans would be vetted against risk parameters.
In total, MicroStrategy owns 125,051 BTC worth about $4.75 billion. It spent about $3.78 billion to acquire them (average price — $30,200).
MicroStrategy was the first of public companies to allocate part of its own capital to digital gold. In August 2020 the supplier acquired 21,454 BTC (~$250 million at the rate at the time of the deal).
MicroStrategy continued to bolster its crypto reserves in accordance with the board-approved strategy.
Since December 2020, the company began using not only its own capital but also debt financing to buy Bitcoin, issuing convertible bonds for $650 million.
In February 2021, MicroStrategy issued a new tranche of more than $1 billion and again invested the raised funds into cryptocurrency.
Throughout the year the firm continued to invest in Bitcoin. The largest purchases were 13,005 BTC for $489 million in July and 7,002 BTC for $414.4 million at the end of November.
In December MicroStrategy reported the acquisition of 1,434 BTC and 1,914 BTC.
Back in January 2022, the company purchased an additional 660 BTC for $25 million.
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