Here is the English translation of the text, with the specified terms preserved:
Michael Saylor's company has not launched any popular products or services. What he and MicroStrategy have done is to issue new stocks and bonds at a rate rarely seen in corporate history, and then invest all the funds in Bit, pledging to do so repeatedly.
Over the past year, MicroStrategy's stock price has risen by about 690%. The 59-year-old executive chairman owns about 10% of the company's shares, worth about $9.7 billion, and he also personally owns about $1.9 billion worth of Bit.
Saylor has become a public figure in the recent Bit craze, with nearly 4 million followers on the X platform (formerly Twitter). To celebrate the Bit price breaking $100,000, Saylor hosted a New Year's party at his Miami Beach mansion, inviting hundreds of members of the crypto community, with his luxury yacht docked nearby. At the party, six golden-clad dancers performed.
Celebrities and investment heavyweights gathered, including former Legg Mason fund manager Bill Miller, Fortress Investment Group chairman Peter Briger, and key portfolio manager Mark Casey of Capital Group.
People's enthusiasm for Saylor's company is so high that a puzzling situation has arisen:
MicroStrategy holds about $47 billion worth of Bit, but its market capitalization is $97 billion. It's as if investors are paying $2 to buy a $1 bill. Surprisingly, experienced investors are among the biggest buyers, including the powerful mutual fund company Capital Group, which held about 8% of MicroStrategy as of September 30, and Norway's sovereign wealth fund Norges Bank Investment Management, which held nearly 1% of MicroStrategy and manages $1.5 trillion in assets.
Fans say
this premium reflects their belief that Saylor can continue to profit from his Bit bet. They believe that the total supply of Bit is limited to 21 million, and this scarcity will increase its value. SYZ Capital partner Richard Byworth, who personally holds MicroStrategy stock,
says Saylor is creating value for shareholders by issuing stock at high prices and selling bonds to the company on favorable terms, while expanding MicroStrategy's Bit reserves.
"This premium is reasonable and will persist," said Jordi Visser, a veteran Wall Street executive who previously worked at Morgan Stanley and recently bought MicroStrategy stock. "No one else can do what he's doing. They have about 2% of the Bit supply, who else can have more?"
However, Saylor's strategy also carries huge risks. He has ridden the investment waves, only to be shattered when the waves reach their peak, sometimes losing tens of billions of dollars in personal wealth in a single day.
Saylor declined to comment on this article.
Saylor has never married and will turn 60 next month. He has had setbacks in his career and has clashed with financial regulators. Last year, he agreed to pay $40 million to Washington, D.C. to settle a personal income tax dispute. Previously, D.C. officials said he actually lived in the district, not in Florida or Virginia as he claimed, and therefore owed taxes to the district.
Saylor's father was a career Air Force officer.
Saylor studied aerospace and science at MIT and joined the Air Force ROTC. A few years after graduating, in 1989, he founded MicroStrategy with a college friend in Tysons Corner, Virginia, initially a data mining software company.
In the late 1990s dot-com bubble, MicroStrategy rose rapidly. Saylor's stock was worth about $10 billion, enough for him to host lavish parties for employees and others, and organize Caribbean cruises. MicroStrategy also bought domain names like Mike.com, Michael.com, Hope.com, and Voice.com, and sold Voice.com for $30 million.
But in 2000, when the internet bubble burst, everything collapsed.
As regulators scrutinized the industry's revenue recognition practices, MicroStrategy was forced to restate its revenues and earnings. This dramatic defeat even attracted tabloid attention: in March of that year, the New York Daily News ran a story with the headline "Lost $6 Billion in a Day" and a photo of the then 35-year-old Saylor, looking dazed in a suit and tie.
Later that year, Saylor and two other executives, as well as the company, paid $11 million to settle SEC accounting fraud charges related to the restatement.
The SEC alleged the company had inflated revenues and earnings, showing a profit instead of a loss, but Saylor and the others neither admitted nor denied the allegations.
In July 2002, MicroStrategy's stock price closed at 45 cents, a sharp drop from its 2000 high of $313, and the company also faced debt issues.
Over lunch at a Bridgehampton, New York, estate, venture capitalist Rick Rickertsen expressed sympathy to Saylor and asked if he was worried about losing his company.
"Possibly," Saylor said, "but I'll start over."
Saylor restructured MicroStrategy's debt and implemented a 10-for-1 reverse stock split to avert the crisis. Over the years, Saylor has been searching for the next big opportunity. For a time, he made substantial personal gains by investing in stocks like Google and Apple, but he dismissed Bit,
tweeting in 2013 that Bit "has a limited future".
By 2020, MicroStrategy's stock price had barely moved for years, with dim growth prospects.
The company was worth only $1.5 billion, but it was still profitable and had about $500 million in cash.
During the COVID-19 pandemic in 2020, Saylor pondered what to do with the company's cash from his home in Miami. Concerned that government spending to maintain economic stability could lead to inflation, Saylor re-examined Bit and became a staunch supporter. He quickly proposed to the board that they use the cash to buy Bit, and the board agreed, mainly because the company seemed to have no better options. They thought it would at least attract some beneficial attention.
"The company was going nowhere, with almost no Wall Street attention," Rickertsen, who later became a board member, said. "The prospects were bleak."
That year, Saylor used about half the company's cash, around $250 million, to buy Bit at around $11,000 per coin. He also invested over $100 million of his own money. However, the Bit price then fell to $9,000, resulting in MicroStrategy recording about $40 million in losses.
"Most of us on the board said, 'Oh my God, what have we done, we're going to get sued,'" Rickertsen said. "Saylor was worried too."
The panic did not last long. Bit prices began to rise, breaking $26,000 by the end of 2020. MicroStrategy borrowed billions of dollars to buy more Bit, including a $205 million floating-rate loan at 8.27%, a challenging loan at the time.Here is the English translation:
Subsequently, at the end of 2022, the cryptocurrency exchange FTX collapsed, and the price of Bitcoin fell below $17,000, while MicroStrategy's stock price also fell to around $17. The company's cost basis for the Bitcoin it holds is around $30,000, resulting in an accounting loss. Rumors abound that the company is in trouble. But Saylor and the company have doubled down on their bets.
As Saylor has increased the strategy of buying Bitcoin through the issuance of stocks and bonds, and the price of Bitcoin has continued to rise, the company's stock price has begun to soar. According to Mark Palmer, an analyst at the investment bank enchmark Company, MicroStrategy raised $23.2 billion through stock and bond sales in 2024 alone.
Saylor's promotional rhetoric may be somewhat repetitive and simple, but his belief in Bitcoin remains unwavering. He emphasizes that the supply of Bitcoin is limited, which is different from the US dollar and even gold. Saylor believes this makes Bitcoin perform better in resisting inflation. He also states that Bitcoin's digital nature makes it more convenient and cost-effective for holders to store and use, without the need for intermediaries, a "revolutionary" form of currency.
Some mutual funds and other institutions have internal rules prohibiting the purchase of Bitcoin and Bitcoin ETFs, so MicroStrategy's stock has become an indirect way for them to bet on Bitcoin. Even some large, conservative investors view the stock as a potential way to gain an advantage over competitors who are unwilling to venture into cryptocurrencies.
It turns out that Saylor is adept at creating different types of equity and debt investment products, such as bank loans, convertible bonds, common stock, and so on, to ensure a steady flow of funding.
"His strength lies in creating different products for different audiences," said Brett Messing, a senior executive at Bridgewater Capital, which manages funds that heavily invest in Bitcoin and provides advisory services for a fund that holds MicroStrategy stock.
Over the past month or so, Saylor has been actively promoting MicroStrategy and Bitcoin on TV shows, popular podcasts, industry conferences, and other occasions. "If you don't buy Bitcoin at the top, you're missing out on an opportunity to make money," he recently posted on Twitter.
"He is passionate in public, but more nuanced in private," said Matt Hougan, chief investment officer of cryptocurrency asset management firm Bitwise, who heard Saylor give a speech at a dinner with 12 investors last summer. Bitwise manages an ETF that holds MicroStrategy stock.
If the price of Bitcoin continues to rise, the premium on holding MicroStrategy stock may persist. However, if the price of Bitcoin crashes, MicroStrategy's stock price may also plummet. Even if the premium disappears, as long as the price of Bitcoin remains stable, its stock price may still be affected. Skeptics point out that some similar investment vehicles, such as closed-end funds, often trade at a discount to the value of their underlying assets, rather than a premium.
However, the company may not face an existential crisis. MicroStrategy currently has $7.26 billion in unsecured debt, most of which was issued at very low interest rates. The company holds 450,000 Bitcoins, with an average cost of around $62,000. Only when the price of Bitcoin falls below $16,000 and remains at that level when the debt matures will the value of the company's Bitcoin holdings be less than its debt.
Just over a week ago, Saylor announced a brand-new way for MicroStrategy to raise funds from investors to support its Bitcoin purchase plan. He announced that the company will sell $2 billion in "perpetual preferred stock" this quarter. This news prompted analyst Palmer to reiterate his $650 target price for MicroStrategy stock, which is about 65% higher than the current stock price.
