The Saylor Belief Tax: Why MSTR Trades 70% Above Its Bitcoin Value
I will like to share with MSTR, known as MicroStrategy, might as well be renamed Strategy Ink at this point.If I look at its chart, over the past five years, it’s soared from a few bucks to over a thousand (factor stock split) —a 25-fold increase, more thrilling than a rocket ride.But if I think that’s the whole story, I’m underestimating Wall Street’s imagination.The real mind-blower isn’t even the price surge.Let me hit you with a soul-searching question. Imagine a clear glass box with $100 worth of Bitcoin assets inside—pure net value, no costs or liabilities.
How much would I pay for it?Most people would say $100, maybe $99 for a deal, right?Wrong.The market’s answer? Some folks would pay $170, even $180, for that $100 box.Yes, I heard that right. This company’s stock has consistently traded at a massive premium over the net value of its Bitcoin holdings.I call this premium the “overflow.”This premium often hits 50%, 70%, or more.
Doesn’t that strike me as odd?It defies basic financial logic. Why would people skip buying Bitcoin at market price on an exchange and instead pay a hefty markup for what’s essentially a Bitcoin voucher?What’s going on here? Are investors brainwashed in a frenzy of irrational exuberance, or is there a high-stakes capital game at play that I can’t see?This is like a heavyweight debate.On one side, I have Michael Saylor, MicroStrategy’s captain, a Bitcoin evangelist and godfather-like figure. He’s out there shouting, “You scoff at the premium? That’s the price of admission to my genius strategy and vision. You’re not just buying Bitcoin—you’re buying a rocket to the moon.”On the other side is Wall Street legend and short-selling maestro Jim Chanos, famous for taking down Enron. He points at Saylor and fires: “This is the biggest insult to investors’ intelligence I’ve ever seen. A massive bubble waiting to pop. You’re paying $170 for $100 and thinking you’re clever?”It’s a clash of titans: a myth-maker versus a bubble-buster. Is this a brilliant leverage play or a Ponzi scheme in disguise?I’ll play Sherlock Holmes, grab a magnifying glass, and peel back the layers to see what’s really in this gourd.To understand MSTR’s madness, I start with its soul: Michael Saylor. This guy’s a living legend. At 24, he founded MicroStrategy, a high-flying enterprise data analytics firm. It went public in 1998, and Saylor was a Silicon Valley star. But in 2000, the dot-com crash hit hard. MicroStrategy was caught in a financial scandal, admitting to inflated revenues. The stock tanked 62% in a day, and Saylor’s personal fortune evaporated by $6 billion—back when $6 billion was real money. He went from billionaire to mere millionaire, sued by the SEC.Most would’ve folded, but Saylor’s a gambler at heart. He settled with the SEC, kept the company afloat, and slogged through nearly 20 years of mediocrity. MSTR’s stock languished around $15, forgotten by Wall Street.Then, in 2020, a game-changing move: Saylor announced MicroStrategy would convert all its cash reserves into Bitcoin, starting with $250 million. This was nuts—a public company ditching its core business to bet the house on crypto?Saylor’s logic was simple and fiery: central banks are printing money like crazy, eroding cash’s value. Bitcoin, he argued, is digital gold, the ultimate hedge against inflation. From then on, he went all-in, buying Bitcoin with every dollar he could get—issuing stocks, bonds, anything to raise funds. He transformed from a software CEO to Bitcoin’s chief preacher, evangelizing at every turn.MSTR’s moves weren’t rational corporate decisions but the fevered bets of a devout gambler tying the company’s fate to Bitcoin. Its stock became a leveraged proxy for Bitcoin’s price, a ship sailing the wild seas of capital markets.Now, I’ll unpack how Saylor sold this madness to Wall Street with three key plays.
Play One: The Smart Leverage Game.
Saylor insists MSTR isn’t just a Bitcoin piggy bank. Buying Bitcoin directly gives linear returns—10% up, I make 10%. MSTR, he claims, is an exponential return machine. How? Leverage.Imagine a $1 million house I think will hit $1.5 million next year.
Option A: Pay $1 million cash, sell for $1.5 million, make $500,000—a 50% return.
Option B: Put down $200,000, borrow $800,000 at 5% interest ($40,000). Sell for $1.5 million, repay $800,000 plus $40,000, and pocket $660,000. My $200,000 investment yields $460,000—a 230% return. That’s leverage.Saylor uses convertible bonds, a hybrid of debt and equity. Investors get interest like regular bonds but can convert to stock at a set price, say $2,000. If the stock soars past that, they convert and cash in. If not, they collect interest. For Saylor, it’s cheap money to buy more Bitcoin. His pitch: as long as Bitcoin’s gains outpace borrowing costs, shareholders get massive profits. I’m not buying Bitcoin—I’m buying a leveraged Bitcoin rocket. Isn’t that worth a premium?
Play Two: The Institutional VIP Bridge.
Before 2024’s Bitcoin spot ETFs, Wall Street’s big players—pension funds, mutual funds, insurers—couldn’t touch Bitcoin. Strict regulations, compliance hurdles, and Bitcoin’s murky legal status made it a no-go. MSTR, a Nasdaq-listed company with a clean track record, became their workaround. Its stock, tied to Bitcoin’s price, let institutions gain exposure without touching crypto directly, bypassing compliance roadblocks.In that era, MSTR was a rare bridge to Bitcoin, worth the high toll. Compared to Grayscale’s Bitcoin Trust (GBTC), with its clunky trading and frequent discounts, MSTR’s stock was cleaner and more liquid. Saylor’s pitch: this compliant gateway is priceless.
Play Three: The Financial Swiss Army Knife.
MSTR’s stock isn’t just Bitcoin—it’s a versatile financial tool. It’s in indices like the Russell 2000, forcing index funds to buy it, creating steady demand. It also enables complex trading strategies—options, hedges, spreads—that Bitcoin spot markets can’t match. This attracts more players, boosts liquidity, and drives demand. Saylor’s case: this flexibility justifies the premium.Sounds convincing, right? Almost persuasive. But hold on—I’ll hear from the short-seller, Chanos, who dismantles Saylor’s temple with surgical precision.
Chanos’ First Strike: Expensive Leverage.
Chanos scoffs at Saylor’s “smart leverage.” He pulls out MSTR’s financials, pointing to bond interest rates as high as 10-12%—near junk bond territory. This signals high risk. Why pay for MSTR’s 12% borrowing cost and 70% premium when I can borrow at 5% through a broker to buy Bitcoin directly?
It’s like using a high-interest credit card to invest and calling it genius.
Chanos’ Second Strike: Times Have Changed.
Chanos reminds me it’s 2025. The SEC approved Bitcoin spot ETFs in 2024, a game-changer. Before, MSTR was the only way to access Bitcoin. Now, giants like BlackRock and Fidelity offer ETFs—clean, cheap, direct Bitcoin exposure with minimal fees. Why buy MSTR’s overpriced bottled water when I can drink from the tap? MSTR’s bridge is now an outdated, overpriced ferry next to a shiny new highway.
Chanos’ Third Strike: A Risky Combo Meal.
Chanos argues MSTR doesn’t just lack value—it adds risks. First, double taxation: MSTR’s Bitcoin gains face corporate taxes (30%) when sold, then shareholders pay capital gains tax (20%+). ETFs skip the corporate layer. Second, operational risks: I’m betting on Saylor’s decisions and the company’s stability. A misstep or cash crunch could tank it. Third, MSTR’s 2000 accounting scandal raises trust issues. Finally, Bitcoin custody risks—hacks or mismanagement—add uncertainty. Chanos’ verdict: I’m paying 70% extra for a bundle of risks. If this isn’t a bubble, what is?Both sides make compelling cases, but they’re biased—Saylor’s pumping the stock, Chanos is shorting it.
I’ll dissect MSTR’s balance sheet myself.
Step One: Strip Away the Irrelevant.
MSTR’s software business is a shell of its former self. Pre-Bitcoin, its stock hovered around $15, with a $4 billion valuation. Revenue’s stuck at $500 million, barely growing (2.7% last quarter). Management’s focus is clearly on crypto. In the slow-growth software industry, a price-to-sales ratio of 4-8 is generous. At 8x $500 million, the software business is worth $4 billion—peanuts compared to MSTR’s $100 billion market cap. So, 99% of its value comes from Bitcoin and Saylor’s strategy.
Step Two: Calculate the Surface Premium.
MSTR holds 629,000 Bitcoins at $118,000 each, totaling $74.4 billion. Subtract $14.4 billion in liabilities, and the net asset value (NAV) is $60 billion. But the market cap is $100 billion. The premium: ($100B - $60B) / $60B = 66.7%, close to Chanos’ 70%.Step Three: Dig Into Hidden Items.
Here’s the twist: of the $14.4 billion in liabilities, $6 billion is deferred tax liability—a paper obligation tied to future Bitcoin sales taxes. But Saylor’s mantra is “never sell.” MSTR even sells small Bitcoin lots at a loss to offset taxes, then buys more. If I never sell, that $6 billion tax liability is theoretical.Recalculate: $74.4 billion (Bitcoin) - ($14.4B - $6B) = $66 billion NAV. New premium: ($100B - $66B) / $66B = 51.5%. Still high, but less insane than 70%.The truth lies between Saylor’s hype and Chanos’ doom. The 50% premium isn’t just numbers—it’s emotion, faith, and meme culture. I call it the “Saylor Belief Tax.”Why the Premium? Retail Investor Zeal: To crypto fans, Saylor’s a prophet, not a CEO. Young retail investors buy MSTR as a badge of identity, like GameStop’s meme stock frenzy. I’m not buying fundamentals—I’m buying a dream of wealth and rebellion.
Saylor’s Skill Premium: Saylor’s a capital markets wizard, raising cheap funds to buy Bitcoin. Some investors see the premium as a fee for his expertise, betting he’ll outperform my own efforts. This is the “Key Man Premium”—the flip side of Key Man Risk.
Scarcity and Short Squeeze Bets: MSTR’s float is limited, with shares locked by Saylor and long-term holders. High premiums draw short-sellers, setting up potential short squeezes. If Bitcoin spikes, MSTR’s leveraged gains could force shorts to cover, spiking the stock further. I might bet on this dynamic.
MSTR is a listed Bitcoin fund that’s ditched its core business, led by a gambler-turned-visionary who’s tied its fate to Bitcoin. Its premium blends rational leverage with irrational fervor. It rode a wave of exclusivity before ETFs, but now, ETFs are eroding its edge.The Big Questions: If Bitcoin stalls, how will I cover MSTR’s $14.4 billion debt’s interest?
With ETFs gaining traction, does MSTR’s leverage still appeal to institutions?
How long can Saylor’s charisma sustain the premium? What happens if he exits?
MSTR’s fate hinges on these. It’s one of the most fascinating case studies in crypto and Wall Street.So, what do I think? Am I Team Saylor or Team Chanos? I’d love to hear your thoughts in the comments, and let’s keep the conversation going!
@TigerPM @TigerObserver @Tiger_comments @TigerStars @Daily_Discussion
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