With the bloody crypto-market sell-off led by Bitcoin outpacing a market retreat in the U.S. stock market, various investors are now turning their attention to Michael Saylor’s business intelligence firm, whose Bitcoin investments seem balanced on a knife-edge.
There is no doubt that Michael Saylor is one of the most popular Bitcoin investors out there, with his firm, MicroStrategy piling billions of dollars into the highflying but risky asset, making it the biggest publicly traded company to hold Bitcoin. However, don’t be misled into thinking that all is rosy with such a huge stash in the current market drawdown.
According to Chris Bloomstran, CIO of Semper Augustus Investment Group, MicroStrategy’s investments in Bitcoin could as well be the last nail to its own coffin.
In a tweet, the fund manager pointed out some glaring issues from a recent 10-Q filing by MicroStrategy with the SEC, which interestingly, got the firm into hot soup with the regulator for using non-GAAP or Generally Accepted Accounting Principles.
The pundit wonders how the “analytics and business intelligence”company made the weighty mistake of investing virtually all of its debt, collateral, plus profits into the now faltering crypto asset.
“These guys took an UNLEVERAGED $500m revenue, $500m book value company earning 7% on equity to then BORROW $2.1 BILLION, sell $900m in shares, to purchase $3.2 BILLION of…BITCOIN,” he writes.
With the company generating roughly $500M in revenue and having $550M in equity sitting on a $2.2 Billion net debt with almost all of its assets in Bitcoin, Chris fails to see how MicroStrategy is going to recover from its current clutter.
“Look no further for proof that the casino is alive and well on Wall Street. Well, perhaps not well,” he exclaims.
Currently, MicroStrategy’s Bitcoin profits are down 31%, wiping out all of 2021’s 40% gain. The firm’s market cap has also nose-dived from $13B in February 2021 to today’s $3.4B with its share price alone dipping by over 72% since November 2021 according to Yahoo data.
However, despite the current market situation, Michael Saylor is yet to show signs of feeling cold in this crypto winter and has continued to state that his company plans on HODLing and acquiring more BTC.
“If you’re going to invest in Bitcoin, a short time arises-4 years, midterm arise-10 years, the right time that arises is forever” he has recently told Bloomberg.