MicroStrategy takes ‘red sweep’ with 477% gain in 2024, high-tech stock

On the eve of Microstrategystock market debut In June 1998, founder Michael Saylor stayed in a penthouse suite at the Lotte New York Palace in Midtown Manhattan. Saylor, who was 33 at the time, says it was the most exquisite hotel room he had ever seen, paid for by major insurer Merrill Lynch.

The next morning, Saylor went to Nasdaq to watch his company’s stock open. He recalled seeing a note scrolling over the symbol, warning traders: “Please do not confuse MSTR with MSFT.” The latter belonged to microsoftthe software giant that had gone public 12 years earlier.

MicroStrategy shares rose 76% in their debut, joining the parade of technology companies benefiting from the dot-com boom.

“It was a good day,” Saylor told CNBC.

More than 26 years later, MicroStrategy and Microsoft are linked again, but for a completely different reason. In December 2024, Saylor appeared before Microsoft shareholders to try to convince them that the company, now valued at more than $3 trillion, should invest some of its $78.4 billion in cash, equivalents and short-term investments in bitcoin.

“Microsoft can’t afford to miss the next technology wave, and bitcoin is that wave,” Saylor said in a video presentation that launched in X last week. The post has more than 3.6 million views.

Saylor has opted for that strategy. MicroStrategy has purchased 439,000 bitcoins since mid-2020, a stash that is now worth about $42 billion and is the basis for the company’s market capitalization explosion to $82 billion from about $1.1 billion when it was launched. the plan is underway.

On Monday, MicroStrategy he said in a presentation which during the past week acquired another 5,262 bitcoins for approximately $561 million, at $106,662 per coin. That brings their total holdings to 444,262 bitcoins.

MicroStrategy’s software unit, which specializes in business intelligence, generates just over $100 million in revenue per quarter. After rising in 1998 and 1999, the stock crashed in the dot-com crisis, losing almost all of its value. In the following decades, it slowly recovered before shooting because of bitcoin.

Four years after its bitcoin buying spree, MicroStrategy is the world leader fourth largest holderonly behind the creator Satoshi Nakamoto, BlackRock iShares Bitcoin Trust and crypto exchange Binance.

At Microsoft, the shareholder vote supported by Saylor failed by a wide margin: less than 1% of its investors voted in favor.

But the show gave Saylor, now 59, yet another opportunity to preach the gospel of bitcoin and tout the benefits of converting as much cash as possible into that single digital asset. It’s a story Wall Street has been eating up.

MicroStrategy shares are up 477% this year as of Friday’s close. second just AppLovin among all US technology companies valued at $5 billion or more, according to FactSet data. This follows a 346% gain in 2023.

While the demonstration was in full force long before November of this year, donald trump electoral victory, founded largely by the crypto industry, boosted the stock further. The stock has risen 60% since the Nov. 5 election and finally surpassed its dot-com era high since 2000 on Nov. 11.

Saylor has long spoken about bitcoin in an evangelical way and co-authored a book about it in 2022 titled “What is Money?” But lately their criticism has become stronger than ever. describing Saylor as a cult leader and his strategy as a leader “ponzi loop” That means issuing debt and equity to buy bitcoin, watching MicroStrategy’s stock price rise, and then doing more of the same.

“Wash, rinse, repeat… what could go wrong?” wrote Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, in a Nov. 12 article. publish in X to his million followers.

Saylor, who has 3.8 million followers, addressed the growing chorus of skeptics last week in an interview with “CNBC.”money carriers“.

“Just like developers in Manhattan, every time real estate in Manhattan increases in value, they issue more debt to develop more real estate, which is why their buildings are so tall in New York City,” Saylor said, in a clip published on X by his legion of fans. “It’s been going for 350 years. I would call it an economy.”

Saylor is a frequent guest on CNBC and appears on several shows throughout the year. He also agreed to two interviews with CNBC.com, one in September and another shortly after the election.

The first of those talks took place at the Lotte, just a few elevator stops from the penthouse where he spent the night before his stock went up on the Nasdaq. Saylor was giving a keynote address to the conference at the hotel and holding side meetings.

He was wearing a designer suit and an orange Hermes tie, matching the designated color of bitcoin. The election was less than two months away and cryptocurrency companies were pouring money into Trump’s campaign after the Republican candidate and former president, who previously called bitcoin a “dollar scam” began to ensure a much more cryptocurrency-friendly administration.

Two months earlier, in July, Trump gave a keynote speech at the largest bitcoin conference of the year in Nashville, Tennessee, where fiance fire SEC chairman Gary Genslera critic of the industry, and said the United States would become the “crypto capital of the planet” if he won.

“I think the election year has inspired the crypto community to find its voice, and I think it has catalyzed a lot of enthusiasm that was dormant,” Saylor said in the September interview. “When Trump came out tentatively positive, it was a huge boost for the industry. When he came out fully positive, it was another boost.”

Until this year, MicroStrategy was one of the few ways many institutions could purchase bitcoin. Because MicroStrategy was a stock, investment firms did not need any special provisions to own it. The mood changed in January, when the SEC Approved spot bitcoin exchange-traded funds, allowing investors to purchase ETFs that track the value of bitcoin.

Since Trump’s victory, everything has been up and to the right. Bitcoin is up about 41% and the BlackRock ETF is up 39%. Gensler is preparing to leave the SEC and Trump has chosen the deregulation advocate and former SEC commissioner Paul Atkins to replace it.

Venture capitalist David Sacks, an avowed conservative who hosted a fundraiser for Trump in San Francisco, will be the “White House cryptocurrency and artificial intelligence czar,” according to Trump. announced earlier this month in a post on his Truth Social platform.

“With the red sweep, bitcoin is rising with a tailwind, and the rest of the digital assets will start to rise as well,” Saylor told CNBC in a phone interview shortly after the election. He said bitcoin remains the “safe trade” in the crypto space, but as a “digital asset framework” is established for the broader crypto market, “there will be a surge across the entire digital asset industry,” he said.

“Taxes are going down. All the rhetoric about unrealized capital gains taxes and wealth taxes is off the table,” Saylor said. “All the hostility from regulators toward banks that touch bitcoin” also disappears, he added.

MicroStrategy has become even more aggressive with its bitcoin purchases. Saylor said in a mail on December 16, that over a six-day period starting December 9, his company had acquired 15,350 bitcoins for $1.5 billion.

So far this year, MicroStrategy has acquired more than 255,000 bitcoins, with approximately two-thirds of those purchases occurring since November 11.

“We were going to do it anyway,” Saylor said, referring to the election results. “But what was a headwind has become a tailwind.”

A week before the election, MicroStrategy announced in its quarterly report earnings release a plan to raise $42 billion in three years. That included a stock sale of up to $21 billion through financial firms such as TD Securities and Barclays, opening up much more liquidity for bitcoin purchases.

Saylor told CNBC it was “probably the most important earnings call in the company’s history.”

No amount of ownership is too much for Saylor, who predicted in September that bitcoin could reach $13 million by 2045, which would equate to 29% annual growth.

“We will continue to buy the best forever,” he said in the same television interview where he compared bitcoin to real estate in New York. “Every day is a good day to buy bitcoins. We think of it as cyber-Manhattan.”

Saylor speaks glowingly of bitcoin as the foundation of a new digital economy that will continue to grow. But even since its bitcoin strategy was launched in 2020, there have been pockets of severe pain for investors: The stock lost 74% of its value in 2022 before soaring over the past two years.

Still, he advises companies to imitate his strategy. Microsoft didn’t listen, but Saylor said there are many “zombie companies,” with core businesses going nowhere that could make better use of their cash.

“The traditional advice would be: If you make a transformative acquisition, you find out you need a merger partner. You’re dead. Go find someone to merge with,” Saylor said at the Lotte in September. “Bitcoin is the universal merger partner, right? The real appeal of digital capital is that you can fix any company.”

Correction: This article has been updated to correct a reference to the number of years since Microsoft went public.