On Wall Street, the star tech stocks are called Nvidia, the master of the AI chip, Microsoft, Apple, Tesla and Netflix. However, their progress is in no way comparable to that of MicroStrategy. The price of this company has increased by almost 600% this year! Its market capitalization reaches more than $80 billion. A surprising amount for a company unknown to the general public and with a turnover for its historical activity in software of “only” 500 million dollars. Michael Saylor, its founder, owes its success to bitcoin.
In 2020, as the value of cryptocurrency explodes, the boss sets up a recurring purchase mechanism within his company. Issues of convertible bonds at zero interest allow him to raise large sums which he uses to buy bitcoin en masse. If the price of the latter increases, MicroStrategy’s shares also increase, since its strategy is essentially based on this. Michael Saylor then issues new bonds, or, more rarely, sells shares which themselves have increased enormously in value over the past four years, in order to feed the machine. The economic media Bloomberg compared the mechanism to a “glitch”. A kind of bug, like in a video game, thanks to which it is possible to create money indefinitely. Well, as long as the price of bitcoin rises, obviously. Which has been the case, so far: despite ups and downs, the unit has gone from around $10,000 in 2020 to nearly $90,000, recently boosted by the election of a Trump administration pro crypto in the United States.
Today, MicroStrategy holds 386,700 bitcoins with a total value of more than $35 billion, including 134,000 purchased last month. A war chest that makes the company one of the largest holders of digital assets listed on the stock exchange. No one currently has that many bitcoins, with the exception of the creator of the cryptocurrency himself, the unknown Satoshi Nakamoto, whose portfolio is said to exceed 1 million units. And which seems destined to remain as it is.
“In the service of the goddess of wisdom”
Not Michael Saylor’s. The man has never sold bitcoins – he also owns several tens of thousands of them personally – and he is ready to mobilize 42 billion dollars to continue his purchases. Because he believes in the benefits of digital assets. This is what he explained to L’Express during an interview three years ago. “Bitcoin is, like gold, in limited quantity. There are no more than 21 million, so it is a “deflationary” asset, it is not sensitive to price increases.” In addition, the entrepreneur saw it as a way to save his business. His stock price was stagnating, his technology company was struggling to compete with software giants. “Either we would die a quick or slow death, or we would embark on a risky strategy,” he confessed to the Wall Street Journal a few years ago.
Saylor therefore adopted the codes of the bitcoin community. Eyes flanked by lightning bolts – others put lasers – in his online profile photos. And mystical words. “Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, growing exponentially smarter, faster and stronger behind a wall of encrypted energy” is his only message pinned on the social network MicroStrategy would then be sitting on a loot unequaled in the history of humanity. And Saylor would become Croesus.
Should we succumb to discourse? We cannot take away from this graduate of the prestigious Massachusetts Institute of Technology (MIT) a certain strength of conviction. He founded MicroStrategy in 1989, and successfully took it public less than ten years later. His straight rise in the digital world has earned him several awards in the American economic press. An essayist in his spare time, he is the author of a noted book on the place of mobile technology in the future, in 2012. In bitcoin, he suffered the severe corrections inflicted on the token two years ago, without flinch. But nothing to do with his shattering entrepreneurial failure during the explosion of the Internet bubble. In its edition of March 21, 2000, the Daily Newsmajor New York tabloid, headline on Michael Saylor’s crestfallen expression: “[Il a] lost 6 billion dollars in one day”. MicroStrategy was then accused by the American financial markets watchdog of having disguised its accounts to turn them into green. When investors got wind of it, the stock collapsed. Nobody had never lost so much money in twenty-four hours.
“If Bill Gates and Steve Jobs had mated…”
In the process, Slate publishes a vitriolic portrait. “You would be troubled to lose $6 billion in a single morning. But Saylor seems totally unconcerned and largely disinterested. He insisted his company did nothing wrong, and he moved on.” The article depicts an authoritarian, brilliant but deeply narcissistic man, seeing himself as the equal of Edison, Ford, Carnegie or Rockefeller, legendary inventors and industrialists: “If Bill Gates and Steve Jobs had mated […]they would have fathered Saylor. Like Gates, Saylor is a ruthless and intimidating nerd. Like Jobs, he is a worship leader, a spellbinding speaker.”
Market experts are skeptical. “Generally, in finance, they say that you should not put all your eggs in one basket. But that is exactly what he is doing. Will he be stronger than the saying?” asks Alexandre Baradez, chief analyst at IG France. Antoine Fraysse-Soulier, his counterpart at the broker eToro, underlines the “dangerous game” operated by the entrepreneur, known in the jet-set community for his wild parties in the SoHo district, in New York. The valuation of the company raises questions. Its dependence on the price of bitcoin is worrying: a stagnation or fall in the price of the cryptocurrency would certainly weaken it. If Saylor, who lost the majority of MicroStategy’s voting rights, starts – willingly or by force – to sell the company’s bitcoins to repay its debts, will the building also hold up? Given the company’s assets, the price of bitcoin would likely be disrupted. A vicious spiral well known to the crypto world, already shaken by the Terra-Luna, Binance, and FTX scandals. Like Sam Bankman-Fried, crypto “gurus” generally end badly.
The taste for risk
In the short term, however, nothing seems to shake the conviction of Saylor, who will celebrate his 60th birthday next year. Neither the competition from “altcoins” vis-à-vis bitcoin, nor that from firms trying to imitate MicroStrategy, nor the rise in power of ETFs, these index funds which fulfill more or less the same role. Nor, finally, the raids of traders specializing in “shorts”, who bet from time to time on the fall of MicroStrategy’s price.
On the contrary, the most serious investors are rushing to the door, like the German insurer Allianz, which has subscribed for $2.6 billion in convertible bonds. And the stock of the company founded by Michael Saylor remains one of the most attractive at the moment. “In a single session, on November 21, it oscillated between a high of $540 and a low of $371, a difference of 170 points. It’s enormous,” breathes Antoine Fraysse-Soulier. Thrill-seekers appreciate being able to play with this title, even more sulphurous than bitcoin. “There is nothing rational, it is speculation, around a spectacular value,” agrees Alexandre Baradez.
“People will eventually realize that the biggest risk lies in not adopting Bitcoin technology,” repeats Saylor, who believes he still has time to convince. He hopes, like crypto enthusiasts, that Microsoft, on December 10, will vote on a proposal at the general meeting to invest in bitcoin as a treasury asset. Or that the United States adopts the recent bill from Republican Senator from Wyoming, Cynthia Lummis, aimed at establishing a “strategic reserve” of this asset. Events that would cause the price of the token to jump, and that of MicroStrategy, which has experienced a slight slump in recent days, around $100,000. Michael Saylor will take his pilgrim’s staff. He needs bitcoin to go higher. Much higher. To the moon“towards the moon”, as the community likes to chant.
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