Business intelligence software firm that has converted its treasury primarily into Bitcoin holdings.Yahoo Finance ↗microstrategy.com ↗
2 takes · first discussed Dec 7, 2024 · last Jan 4, 2025
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Jason argues MicroStrategy trading at 2-4x the book value of its Bitcoin holdings is unsustainable and a candidate for peak valuation.
Gavin Baker warns that MicroStrategy's debt-funded Bitcoin accumulation strategy will become unsustainable as the underlying business ($400M revenue) is too small to support growing interest expenses unless fixed income markets fully accept Bitcoin as collateral, which they don't yet.
Both Gavin Baker (guest) and Jason lean bearish on MicroStrategy, though from different angles. Jason views the stock's premium of 2–4x the book value of its Bitcoin holdings as fundamentally unsustainable and indicative of a peak valuation. Baker's concern is structural: MicroStrategy's underlying software business generates only ~$400M in revenue, which he argues is far too small to reliably service the interest expenses on its growing debt load unless fixed income markets come to fully accept Bitcoin as collateral — something he does not believe has happened yet. Neither host expresses a bullish view, with medium conviction on both sides pointing to meaningful skepticism about the company's current strategy and valuation.
Jason argues MicroStrategy trading at 2-4x the book value of its Bitcoin holdings is unsustainable and a candidate for peak valuation.
I looked at MicroStrategy, and that made no sense to me that they were trading at 2, 3, 4 times the book value of their Bitcoin, and I think that's not sustainable.”44:16
Gavin Baker warns that MicroStrategy's debt-funded Bitcoin accumulation strategy will become unsustainable as the underlying business ($400M revenue) is too small to support growing interest expenses unless fixed income markets fully accept Bitcoin as collateral, which they don't yet.
I think a lot of hedge funds are short MicroStrategy, but I have no horse in the race. But his, the underlying business that pays the interest expense on the debt only does $400 million a year in revenue and it's high gross margin revenue.”42:09