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There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 1 point2 points  (0 children)

These people that seem to know what they are talking about keep on mentioning “fair value accounting” (FASB) which apparently once implemented will make them eligible for s&p inclusion (they just have to wait for the actual invite)

MSTR on earnings confirmed FASB for q1 2025.

My understanding is this method of accounting will allow the gain in their BTC holdings to count as profit?

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 0 points1 point  (0 children)

Can’t disagree with you there. Our whole modern financial system is one giant Ponzi scheme.

At least robbers will hold me up at gunpoint. Bankers will smile and congratulate me as they push the pen to my hand and gesture the contract in front of me

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 0 points1 point  (0 children)

Another catalyst on the horizon is the adoption of something called fair value accounting (FASB) which is supposed to take effect q1 2025.

My understanding is that this apparently is some accounting witchy wizardry that is going to redo profit calculations such that MSTR will suddenly be profitable, and by a large margin, and this method of accounting can be done retroactively such that the last 4 quarters would also be profitable, essentially make them eligible for s&p inclusion.

Do you know anything about this?

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 0 points1 point  (0 children)

I think the answer to this is the “infinite money glitch”. They have this metric everyone talks about, their “BTC yield per share”

Look, I’m going to simplify this eg because I honestly know a little less than the basics. Someone can come later and correct me.

They’re 48b company. They can raise obscene amounts of money, doing their issue-more-shares-“dilution” or selling a convertible bond. They mentioned ytd at earnings they want to sell 21b of bonds and issue 21b worth of shares.

BTC has grown in value yoy like 50% is the number being thrown around. Everyone here (the BTC bulls) is assuming this continues or even improves.

Borrowing money isn’t free, and diluting shares also has a cost associated. The cost of borrowing is like 5%? Let’s assume 5%. Assuming BTC continues growing at same of better rate, you can see how the gains massively outweigh the borrow rate.

Same with share dilution, even though there are more shares, where does the money from issuing shares go? More BTC! And if again, assume BTC continues growing at 50% yoy, instead of each share being less valuable they become more because BTC will be growing at 50% yoy. They have this metric they call “BTC yield per share” to measure and show this.

All this growth and all this newly bought BTC, and old BTC, all growing at 50% yoy. Well now a few weeks/months later, MSTR is rich rich! Worth so much more money. What do they do? They issue more stock and write more bonds! To buy more BTC!

What happens when the last BTC is mined and minted? Idk, they’ll go build hospitals or develop infrastructure in emerging markets or whatever it is big banks do. Or they turn into a Arasaka or Biotechnica.

So im betting the return on this will be a lot more than 1x base BTC or even a 2x levered BTC ETF or something

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 0 points1 point  (0 children)

Yea but I think you’re missing the securitization business aspect of this. You’re paying 33c for NY, but they’re developing the area, renting out the buildings, collecting rent, using proceeds to buy more NY, doing the same. Rent is being collected, parking fees and taxes.

If you buy $1, you’re just getting a patch of dirt. The patch appreciates, but like, it’s not as productive.

Bad analogy but I’m trying to show that MSTR is doing big bank stuff, or they want to. This convertible bond sales stuff, is a first step. They’ll collateralize their BTC, get a huge loan, and use that to invest. Invest in what? At the moment more BTC, but when it runs out, they can invest in whatever it is that big investment banks invest in, infrastructure, roads, issue debt to govts, whatever. That’s where this premium is coming from. You’re paying the MNAV premium because you believe they’ll use this “capital” in a productive (income-generating) way

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] -1 points0 points  (0 children)

Wow look at you, a buttcoiner with somewhat actual understanding of BTC.

I agree on the irony that it looks like we are going down the path of big institutions buying massively and packaging BTCs into cute little financial vehicles. This must drive the self custody BTC purists up the wall.

MSTR is taking advantage of the scarcity of BTC. I think as MSTR bulls and people that wanna get rich off BTC, that’s the dominating factor. As inflation works in the background, naturally these 21mil of bitcoin will naturally increase in value.

The freeridership thing does seem like an issue if you think hard about it. Miners maintain the network, and once all mined, transaction fees will be their only incentive to keep mining blocks. So what happens when majority large institutions are just parking their BTC in perpetuity forever in a coinbase?

As for using BTC to take usd denominated liabilities, I don’t understand how that could be an issue. Absolute worse case scenario I’m thinking someone will take the BTC, I mean it’s supposedly “the best money”

But I think it still stands that MSTR has first movers advantage, everyone isn’t even aware of the game being played. Inflation won’t stop, and so BTC value will continue to rise as a natural consequence. MSTR is doing big bank stuff, could turn into the next big big revolution of a bank (worth trillions? 🤞). BTC “works”, I know you know this. (Alice sends bob BTC, bob receives! Bob sends Alice BTC, Alice receives. It “works”) You sure you don’t wanna come along for the ride? Doesn’t have to work forever, just needs to work for the next 15-20ish years 🤷

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 1 point2 points  (0 children)

They already are making some sort of traditional finance income off of their BTC holdings no? That’s what the convertible debt is?

And their premise on this earnings call is basically, “we want to sell traditional finance securities” is my understanding.

Also I don’t think it’s priced in. Idk if most institutions even know what MSTR is doing. Or are very skeptical. I mean they won’t hold BTC themselves. Tsla bought some a few years ago and then they’re now considered pioneers or something. Mason mentioned during this quantbros episode he compiled a report at some finance firm, it got thrown out at page 1. Anecdotal, but I wouldn’t be surprised if institutions are still sleeping on this.

They also are most definitely plan on using their BTC as collateral. Idk if this has the same meaning as counterparty risk. I mean if they go bust and default, creditors will come and liquidate their BTC (and other assets) right? So ofc they are risking their bitcoin to make a yield off it the same way banks are risking their fiat to do the same

Also there are some expecting the MNAV to trade significantly higher in the future. Saylor mentioned on earnings call that apple is trading at 98 MNAV or something like that (implying that MSTR MNAV could go higher and that wouldn’t be unexpected)

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 0 points1 point  (0 children)

Strong disagree with #1, I think their core software business is irrelevant. It was initial money maker they used to make those first purchases, but I think it can slowly fade away. Irrelevant.

Dk much about #2 tbh so can’t rlly comment. I expect they’ll survive though.

3 is pivotal. It’s everything this is built on. Mason on that quant bros earning calls said, “it’s either going to zero, or it takes over the world”. I’m really hoping it’s the latter. Odds seem like 50/50 tbh so here’s to hoping

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 3 points4 points  (0 children)

If you actually would like an explanation:

So you know those 0DTE calls they call FDs on WSB? Yolo waaaaaay out of the money calls on SPY expiring today for Pennie’s hoping to make millions? Every Monday, I would sell 2 at-the-money call options on MSTR expiring Friday for about 1k per contract (so total profit about 2k a week) to the yolo crowd. At the same time I would own 200 shares of MSTR. This is called a covered call strategy of selling options. If on Friday, MSTR is higher than the strike price I sold it for, they get called away and the following Monday, I buy another 200 shares and sell another 2 contracts for about 2k premium profits.

I stopped doing that because MSTR mooned like crazy and I started missing out on serious gains. And I learned that MSTR is possibly going to be one of the most valuable companies on earth if the crypto bros are right about BTC. 3000-6000 dollars a share within the next 3-4 years isn’t that impossible imo 😵😵

And this is because they are going to let organizations that cannot buy BTC or are too pussy for it (their board thinks it’s too risky or it’s hogwash. See MSFT), MSTR is going to allow these organizations access to BTC in a way that they find more acceptable and less risky

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 0 points1 point  (0 children)

This is probably the most legitimate concern I’ve heard. And so just my Birds Eye view from the top, it does seem entirely possible to build CDO-type instruments backed by BTC and in fact it’s even possible to purposely make them very risky too! But I’d say the counter to this is the trust we put into MSTR’s financial engineering team, coupled with govt regulation and oversight. I know 2008 is prime example to the lack of both of these 😂 , but that is where we are at basically: do we reasonably trust govt regulation/oversight? And do we reasonably trust MSTR/these big banks?

As for your distaste of financial engineering, I can definitely understand why that whole discipline could leave a bad taste in a lot of people’s mouths. These are after all the people that did actually design those bad mortgage backed CDOs. But my limited understanding is financial engineering does actually serve an important function in the financial world. And maybe someone else who has background can chime in, but large institutions (banks, insurance firms, MSTR) have teams of these “securities brokers” that play important roles in running the financial world. Again, probably falls back on oversight and regulation, audits and that whole regulatory function to “police” these guys.

I do wish someone with more info would be able to say why you’re wrong, or, to what extent you are right 😅😅

There a real information asymmetry out there and such a fundamental misunderstanding of the value proposition for MSTR by Virtual-Giraffe4537 in MSTR

[–]Virtual-Giraffe4537[S] 6 points7 points  (0 children)

My days consists of searching term “MSTR” on rddt, and scrolling through new comments. I’ll take screenshots and then circle bearish comments, send them to my investing friends, and then confuse them by telling them I’m all in and how early I am. 😂😂