MicroStrategy's Bitcoin gamble has paid off big time. The company's stock has skyrocketed 1,000% since its first Bitcoin purchase. Warren Buffett told us Michael Saylor with his MicroStrategy would fail, because Bitcoin is 'a fraud', you know, and he couldn't have been more wrong.
It's been four years since MicroStrategy took the plunge. On August 10, 2020, they became the first public company to use Bitcoin as their main reserve asset. Basically, Saylor just started buying Bitcoin like there was no tomorrow. And he is still doing this today.
MicroStrategy now holds 226,500 BTC. That's worth a cool $13.771 billion. They snagged these coins at an average price of $37,000 each. Bitcoin's currently trading around $59,500. Do the math, and you'll see they're sitting on unrealized profits of about $5.3 billion. That would be a big deal even for Buffett. Ho is probably just envious, right?
And MicroStrategy is not selling. Nope, not a single coin. In fact, they're doubling down. Their most recent purchase was on August 1st. So they keep buying as the price goes up, which might again seem a very questionable strategy.
Michael Saylor, MicroStrategy's main man, is giving Buffett a run for his money again and again, pushing for Bitcoin Maximalism strategy and HODL philosophy which is still considered as 'crap' by many respected financial leaders.
And yet, MSTR stock has surged 1,000% since August 2020. That's 1.5 times better than Bitcoin itself and 16.25 times better than the S&P 500. How is that even possible?
And how is Buffett doing?
Oh, he is doing fine. By all means. Except for Bitcoin standard.
Buffett's Berkshire Hathaway Class A stock (BRK.A) is lagging behind. It's only gained 104.75% in the same period. Buffett's been a bit of a grump about crypto, and it's cost him.
Remember when Buffett called Bitcoin "rat poison squared" back in 2018? His buddy Charlie Munger went even further. In 2021, he predicted Bitcoin would crash to zero, calling it a "disgusting product". Ouch.
But here's the real kicker: Bitcoin and MSTR have outperformed Buffett's top stock picks. We're talking Apple, American Express, and Bank of America. Not too shabby for a "rat poison", eh?
Not everyone's on board the MicroStrategy train, though. Some traders are looking to short MSTR stock. Kerrisdale Capital reckons it's trading at an "unjustifiable premium" to Bitcoin.
Sahm Adrangi, the big cheese at Kerrisdale Capital, told Cointelegraph: "The software business is worth a billion, maybe a billion [point] five, somewhere in between — it's not worth very much." He added, "Bitcoin prices have to go up for the value of the company to increase. If they go down the value of the company goes down. The company should be trading at the value of Bitcoin. Our argument is 'go short MicroStrategy, go long Bitcoin.'"
So there you have it. MicroStrategy's Bitcoin bet is still a hot topic. Whether it's genius or madness, only time will tell. But for now, Saylor's laughing all the way to the bank.