Michael Saylor's Bitcoin investment strategy leads with the title of the largest public Bitcoin holder in the world, maintaining a stock valuation that exceeds the net asset value of Bitcoin (NAV).
This strategy leverages low-cost capital and innovative financial planning to enhance intrinsic value, creating a sustainable competitive advantage in the corporate cryptocurrency market.
MAIN CONTENT
The strategy maintains a stock valuation that is 72.6% higher than the value of Bitcoin held.
TD Cowen demonstrates the reasonableness of the valuation through effective financial mechanisms and the '42/42' plan.
The potential to own 900,000 Bitcoin by 2027, equivalent to 4.3% of the total global Bitcoin supply.
Why does TD Cowen support a higher stock price than the strategy's NAV?
According to TD Cowen experts, the valuation gap is not unreasonable but reflects the strength of low-cost capital raising creating real value. Currently, the strategy's market capitalization reaches $124.3 billion, while the value of Bitcoin held is $72 billion, resulting in a premium of 72.6%.
This analysis is based on the fact that the company effectively utilizes financial leverage to increase its Bitcoin holdings without issuing additional shares, creating an advantage over other institutions.
How does the expert refute the 'Greater Fools' theory?
Unlike views suggesting that high prices are due to expectations of reselling to others at higher prices, TD Cowen emphasizes that the financial strategy '42/42' has created solid intrinsic value, not just a speculative bubble.
This plan aims to raise $84 billion in capital through equity and debt by 2027 with an average borrowing cost of only 0.421%, allowing for increased Bitcoin per share without diluting shareholders, while also creating a unique Bitcoin 'yield' effect for investors.
"The sophisticated financial strategy of the strategy leverages effective leverage not only to protect but also to increase Bitcoin assets, generating sustainable returns that ETFs or individual investors find hard to replicate."
Lance Vitanza and Jonnathan Navarrete, TD Cowen experts, 2024
What advantage does the 'Capital Flywheel' effect bring to the strategy?
The strategy employs a continuous capital rotation to sustainably increase Bitcoin reserves. Recently, the company raised $739.8 million through the issuance of $21 billion in bonds, purchasing 6,220 Bitcoin at an average price of $118,940/coin, and recorded a profit of 3,077 BTC without needing to issue new shares.
Since the beginning of the year, the amount of Bitcoin per share has increased by 20.8%, doubling compared to 18 months ago, far exceeding the usual NAV-based valuation model. The launch of the 'Stretch' (STRC) preferred stock expands the ability to raise capital even more effectively.
Can the strategy own 900,000 Bitcoin by 2027?
With over 607,770 Bitcoin currently held, the strategy is projected to increase its holdings up to 900,000 Bitcoin, equivalent to 4.3% of the total global supply, according to TD Cowen's forecast.
The target price of $680 for MSTR shares is also maintained, reflecting confidence in the long-term vision and the ability to raise low-cost capital that reshapes how businesses invest in Bitcoin.
"We believe that the Capital Flywheel model of the strategy is not only sustainable but is becoming the new standard for businesses looking to invest in cryptocurrency effectively."
Jonathan Navarrete, TD Cowen Analyst, 2024
Frequently Asked Questions
How does this Bitcoin investment strategy differ from other investment entities?
The strategy stands out for its ability to raise low-cost capital and its '42/42' financial plan, helping to increase Bitcoin holdings without diluting share value, creating a sustainable investment advantage.
Is the premium on NAV a sign of a bubble?
TD Cowen experts assert that the premium is reasonable due to financial efficiency and the ability to create intrinsic value, not based on speculative expectations.
How long can the strategy continue to buy Bitcoin at low costs?
The fundraising plan is expected to last until 2027 with an average borrowing cost of only 0.421%, ensuring a continuous low-cost cash flow for ongoing Bitcoin accumulation.
What percentage of the total supply does the current Bitcoin reserve correspond to?
Currently, the strategy holds approximately 607,770 Bitcoin, accounting for nearly 2.9% of the total global supply.
What impact does the 'Stretch' (STRC) preferred stock plan have?
STRC enhances capital-raising ability without diluting shares, supporting more effective scaling of Bitcoin reserves.
Source: https://tintucbitcoin.com/michael-saylor-muon-so-huu-900-000-bitcoin/
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