$BTC Michael Saylor’s Strategy premium is not ‘unreasonable’: Adam Back
Adam Back says that since Strategy typically takes 16 to 18 months to double its Bitcoin per share, the premium on its stock is not "unreasonable.”
Blockstream CEO Adam Back says Michael Saylor’s Strategy (MSTR) stock premium is within reason, considering how quickly the firm doubles its Bitcoin per share, which reduces risk for investors.
“It turns out in the case of MicroStrategy it’s been 16 months, 18 months,” he told Bitcoin podcaster Stephan Livera at BTC Prague on Saturday, referring to the typical time it takes for Strategy to double its Bitcoin
$102,381
per share, noting that the stock has traded at a 2x multiple “on and off.”
MSTR’s track record justifies its premium, says Back
“So you can see that that’s not an unreasonable premium,” he said. Back explained that if Strategy’s Bitcoin per share keeps growing at the same rate, after about a year and a half, investors “would be at an equivalent” of the market net asset value (mNAV) — meaning the stock price would align with the value of its underlying Bitcoin holdings.
“So, you’re derisked actually,” he said.
“It’s got a hard currency base at that level,” he added. MSTR’s net asset value premium is currently about 1.7x based on basic shares and around 1.9x when calculated on a diluted share basis, according to MSTR Tracker. Strategy uses leverage, using financial instruments such as at-the-market equity offerings (ATM) and convertible senior notes to increase its Bitcoin holdings.
Saylor Tracker data shows the firm holds 592,100 Bitcoin at the time of publication, worth approximately $60.89 billion.
MSTR closed the trading day on Friday at $369.70, down 7.45% over the past 30 days, according to Google Finance data.
Back reiterated that when investing in Bitcoin treasury companies, it’s important for investors to consider whether the premium “is reasonable.” He added:
“One way to think about the premium is how many months does it take to overcome the premium.”
