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Analyzing Microstrategy Q1 2024 Results: Insights for Investors

Microstrategy 2024 Q1 Results Key Insight:

Microstrategy is a business analytics & intelligence company that provides intelligence to companies like Disney, Walmart, Amazon, CVS Health to name a few.

Click Here for the full report posted by Michael Saylor
of Microstrategy 2024 Q1 Results.

They adopted a bitcoin strategy during the pandemic to combat business decay and forward thinking inflation issues from the money printer which increased the money supply, devaluing the cash they held.

  • ⚡ Holding 214,400 bitcoin at $7.54 billion cost.
  • ⚡ bitcoin unrealized gains value $5.4 billion.
  • ⚡ Total bitcoin value $12.93 billion.
  • ⚡ Avg price $35,180 per bitcoin.
  • ⚡ Business revenue $115.2 million, down 5%.
  • ⚡ Acquired 25,250 bitcoins since end of Q4 2023 for $1.65 billion at avg price $65,232.
  • ⚡ Gross profit Q1 $85.2 million.
  • ⚡ Operating expenses surged by 152.8% compared to same time last year.
  • ⚡ Loss from operations of $203.7 million. which is 10x higher than same time last year.
  • ⚡ Net loss was $53.1 mil.
  • ⚡ $81.3 million in cash.
  • ⚡ Convertible notes issurance to purchase bitcoin:
    (a) $800 million at 0.625% p.a due 2030.
    (b) $603.8 million at 0.875% p.a due 2031.

The interest total payable is $10.52 million, paid twice per year to the note holders.

The note holders have the option to:

  1. Convert the notes into shares of $MSTR at $1,497 & $2,327 per share in 2030/31.
  2. Hold until mature and $MSTR pays them back the principle.
  3. Hold and decide to postpone to convert at a later date if they deem the price of shares will come down.

They way they are converted:

If they initially invested $10,000 US to buy the notes, they handed Saylor the $10k to buy bitcoin.

In the year 2030, let us assume $MSTR is trading at $4,000 per share.

The note holder can redeem their notes at $1,497.

$10,000 / $1,497 = 6.68 shares (rounded).

But the market is trading at $4,000 per share in 2030 possibly due to their bitcoin stack worth X mulitples more than the initial investment today.

6.68 x $4,000 = $26,720 of value, or 167% gain.

In this 7 years, the note holder has also received interest at $0.625% or $427.50.

Total value $27,147 or 171.47% gain from initial investment.

The opposite is also true. If the share price is BELOW the $1,497, they may wish to hold onto the note.

Generally speaking, the note holder wouldn't invest in the vision of the capital raise unless they believed the share price or company value would be greater than their initial investment.

Thank you for reading.

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