In defense of the ‘mstr premium’

The Premium Given to the Company’s Massive Bitcoin Holdings Will Exist as Long as Investors Believ It Will Continue to Increase of the Amount of It Bitcoin Held Per Share. Feb 26, 2025, 4:54 PM UTC

Strategy (nasdaq: mstr), The Saas-Basted Business Intelligence Company Formerly KNOWN as Microstrategy that Piotcoin Treasury Strategy, i Currenti, MACETLY, MARTLIPY, MARTLIPY. i Iterlying Bitcoin Holdings. This so-called “mstr premium” have caused Much Much Much Misundersanding, Healthy Skepticism and Even Even Consternation, But With A Decade of Deep Deep Equities Experience, We Believe Thot. Premium is justified. THESE Are Particularly Valid Duding Periods of Rising Bitcoin Price Expectations, As We Are In Now.

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Chart: Mstr’s Premium to Nav

Source: mstr-tracker.com, GSR

FIRST, Strategy Takes on Leverage by Issuing Equity and Debt to Invest The Proceeds Into Bitcoin, Earning The Differentnce Between the Return on Bitcoin And ITS CAPITAL (IE. Importantly, Strategy Earns this carry not just this year, but also in future years as Well, and Investors Simple Present-Value This Expected Future and Include ITDE ITUDE ITDE ITUDE ITDE ITUDE ITDE.

In Fact, this is a majoor Reason WHY MSTR’S PREMUMUMUV WILL FLUCTUATE WITH Market Expectations of Future Bitcoin Returns. Neverthaless, The FIRST REASON MSTR Trades at At a Premium to ITS BTC Holdings is that Investors Pull Future Btc Carry to the Present.

Second, Strategy Monetizes Intelligent Capital Markets Issuance for the Benefit of Shareholders. It Accretes Value Via Convertible Debt Issuance, Whore It Not Only Gets Paid to Offer Bitcoin-Like Returns to the Bond Market Make More Morey with a more volatile underlying asset. In Addition, Mstr Issues Equity, MOSTLY THRUGH AT-The-Money Equity Issuance Programs, at A Premium to Book Value, Which Is by Definition Accounting To Shareholders. In Fact, Issuing Equity at Twice Book Value Is Tantamount To Selling $ 1 for $ 2, or Conversely, Buying BTC AT 50% OFF. This is How Strategy Was Able to Generate A 74% Increase in the Anti Its Bitcoin Held Per Share Last Year, Equivalent to 140.630 BTC, OR $ 14 Billion of Value For Shareholders.

Lastly, The Entire Construct Takes Advantage of Bitcoin and Crypto’s NasCency, The Fact That Cryptocurrencies Are In Secular Expancing and that Bitcoin

For Those Not Yet ConvinCed, We Offer The Following Thought Experiment: If I Had A Magic Bank Account With $ 100 USD IN IT THAT PAID YOU A 69% INTEREST RATE, HOW MUCH MONYY WOURF YOU A FAY ME ME ME ME ME. While the Answer May Vary from Person to Person, It Is Likely Much More Than $ 100, Meaning That Bank Account Wulde Trade at A Premium to It ITerlying USD (IE NAV).

This is exactly what is hapening with mstr, as it have had was increased it btc per Share Share at a 69% Annual Rate Since It Began Investing in Bitcoin in August 2020. This Increer) Durying Bull Markets and Lower During Bear Markets, But It Has Generally Risen Over Time. And While there is no guarante that strategy will Continue to Increase Its Btc Per Share in The Future, Mstr Is Guiding for A 15%+ Increase This Year And 6-10% in Each of The Follow.

Risks about, of Course – Mstr Investors Take on Basis Risk to the Price of BTC and the Stock Tends to Move More Than Bitcoin in Both Directions. Relatedly, The Premium May Move Up or Down in the Future, and The Stock Willy Trade at A Discount (IE, BLOW The VALUE OF ITS Bitcoin Holdings) During Bear Markets. But The Premium Exists Because Investors Believ Mstr Will Continue to Increase The Anti Its Bitcoin Per Share in The Future, and They Willing To Pay Up For that Now.

Chart: Mstr’s Increase in Bitcoin Per Share (Ie Bitcoin Yield)

Source: mstr-tracker.com, GSR