In this story, I try to explain (again) what I have been talking about for four years…
MicroStrategy was the subject of my third recorded video and this will be interesting. I have built an appraisal of MicroStrategy stock as if it were a Fortune 500 company. I will break all that down and show you what the value could be if they continue doing what they are doing.
This could be the beginning of a new revolutionary bond market. People are paying to give MicroStrategy money, it is nuts! This is an infinite money glitch. The market cap is nearly $100 billion and they are about to drop another $42 billion on Bitcoin.
Could this be a new financial paradigm the world has never seen before?
The Bitcoin Therapist podcast inspired today's lesson.
It is a short clip where Michael Saylor explains the MicroStrategy premium. Many people do not take the time to study what this company is about, so I will break it down again.
I took the key information from this podcast and created a financial model around it.
I want to stress that everything can go to zero. MicroStrategy can go to zero. The question is, what is the probability?
This is what you need to focus on as an investor. What is the risk-reward and how do you balance it?
This is part of the reason I consciously decided in late 2022 and early 2023 to go hard with options into MicroStrategy.
Here is my MicroStrategy conservative valuation.
I am treating MSTR as if it were an S&P 500 stock. Remember, stocks are valued based on the expectation of future earnings. MSTR's earnings are from buying Bitcoin from free money they borrow for nothing and watching it appreciate because fiat is going down. Fiat is going to zero and Bitcoin will be scarce.
The discount rate is normally about 6% or less and Bitcoin's annual increase averaged around 40%. Combining these two factors is approximately $208.8 billion. Therefore, the company has a more than 2x upside.
I am not saying it is going to do that but trying to explain what people who are capital market professionals are seeing and the rest of the world does not.
Currently, Bitcoin's CAGR is 50%. It is harder than ever before, as its stock-to-flow is like 112 now - like real estate.
Therefore, the CAGR should technically go up over time.
Michael Saylor is dropping all the breadcrumbs and the bond market is huge.
People lend money to get paid a fee called a coupon on their bond. For the longest time, 40% of the world was in the bond market. Now, people realize that
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