Michael Saylor, president and CEO of MicroStrategy, during an interview at the Bitcoin 2023 conference in Miami Beach, Florida, USA, on Thursday, May 18, 2023.
Eva Marie Uzcategui | Bloomberg | Getty Images
MicroStrategy Bitcoin founder and evangelist Michael Saylor entered into a stock sale plan with his company last summer that allowed him to offload up to 400,000 shares in the first four months of 2024.
It was a timely deal for the 59-year-old crypto billionaire.
With the plan more than 90 percent complete, Saylor has made about $370 million from this year’s share sale, thanks to the stratospheric rise in MicroStrategy’s value, which is essentially bitcoin parent company.
Saylor, who started MicroStrategy in 1989 as a software and technology consultancy and is still chairman, has emerged as a bitcoin hero in recent years, telling CNBC last month that the cryptocurrency will “eat gold.” His company used its balance sheet and leveraged the capital markets to acquire more than 214,000 bitcoins since announcing its strategy to enter the crypto market in mid-2020.
Those assets, equivalent to about 1% of the total number of bitcoins mined to date, are now worth about $13.6 billion, representing the bulk of MicroStrategy’s $21.3 billion market cap. The stock has been a Wall Street favorite in recent years, up 91 percent this year — despite a 37 percent retreat from its March high — after surging 346 percent in 2023, one of the best performers in the entire U.S. stock market.
Saylor is MicroStrategy’s largest shareholder, with Class B holdings worth about $2.3 billion. At the end of 2023, Saylor owned another 400,000 Class A shares due to an option he received in 2014. These are the shares he is selling at speed.
He was buried near the end of it third quarter earnings filing On November 1, MicroStrategy announced that the company and Saylor had entered into an agreement, called a 10b5-1 plan, in September, allowing the founder to sell up to 5,000 shares each trading day from January 2 to April 25. year, up to a total of 400,000 shares. The shares were attached to a “vested stock option, which expires if not exercised on April 30, 2024.”
As of this week, Saylor has sold 370,000 shares worth a total of $372.7 million, according to filings. His Class A holding was reduced to 30,000 shares as of the date last sale revealed on Thursday.
MicroStrategy did not respond to requests for comment.
Mark Palmer, an analyst at Benchmark, called the share sales “entirely programmatic” due to the trading plan executed last year and not at all reflective of Saylor’s confidence in MicroStrategy or his view of the stock’s price.
However, there is a different view in the world of retail investors. Numerous posts on Reddit suggest that Saylor is perhaps selling for other reasons, with some of his members r/MSTR The subreddit speculates that he is using the cash to buy bitcoins directly. Some say they sell with Saylor. The stock fell 29% in April, while bitcoin fell 11%.
“Easy enough to find the truth”
Palmer, who has a “buy” rating on the stock, countered that such a view “would be misread” by investors and traders.
“What we see here is very simple and everything has already been revealed,” Palmer said. “It’s easy for those who either don’t understand the details or those who do understand the details but may be short on stock to twist things a bit. As usual, it’s easy enough to find the truth.”
Even with the stock sales, the majority of Saylor’s wealth remains wrapped up in MicroStrategy Class B, along with the 17,732 bitcoins he bought in 2020 worth about $1.1 billion.
Much of the rally in bitcoin and related investments has to do with its appearance bitcoin exchange-traded funds, which received regulatory approval earlier this year, and the upcoming halving this week. The technical event occurs every four years, halving rewards for bitcoin miners and slowing the rate at which new bitcoins enter the market.
In a market where consumers can buy bitcoin directly on various exchanges or choose from a range of new ETFs, Saylor said MicroStrategy’s continuing advantage is that it’s a leveraged bitcoin play with no management fee. The company may raise money to delve into crypto, he said last month the wrapped to $782 million “to acquire additional bitcoins.” The cash came from the sale of convertible debt with an interest rate of 0.625%.
“Is there a company in the world you wouldn’t want to invest in that could borrow $1 billion at less than 1% interest to invest in your best idea?” Saylor said on CNBC’s “Squawk Box” in March. He added that the company’s leverage leads to volatility, which “attracts capital and then we can leverage more.”
Benchmark’s Palmer said there are plenty of reasons to remain bullish on MicroStrategy, especially with the halving just around the corner. After the previous halving events, the price of bitcoin has soared.
“If I were in a situation where I had stock in MicroStrategy, this is the time I would love to hold it,” Palmer said.