Key Takeaways
- Michael Saylor is willing to advise Donald Trump on crypto matters if requested.
- MicroStrategi continues to focus on Bitcoin funds as a primary method of value creation.
MicroStrategi co-founder and executive chairman Michael Saylor said Wednesday that he would be willing to provide cryptocurrency advisory support to President-elect Donald Trump if asked.
“I am always ready to give an opinion on constructive digital property policy whether in trust or publicly.” And if I’m asked to serve on some sort of Digital Asset Advisory Council. I probably would,” said Saylor, speaking further Bloomberg Open Interest.
While Saylor confirmed that he has met with many people in the incoming Trump administration, he declined to provide further details.
The announcement comes as MicroStrategi prepares to join the Nasdaq-100 along with Palantir Technologies and Akon Enterprise, replacing Super Micro Computer, Moderna and Illumina, effective Dec. 23.
However, the company’s Bitcoin holdings could threaten its index position. MicroStrategi recently bought an additional $1.5 billion in Bitcoin, bringing its total holdings to 439,000 BTC, worth approximately $45 billion.
The massive Bitcoin stock could see MicroStrategi reclassified as a financial company in a March review by Industri Classification Benchmark (ICB). This reclassification would likely result in the company’s removal from the Nasdaq-100, as the index includes only non-financial firms.
Addressing concerns about MicroStrategi’s reclassification, Saylor said the company isn’t just relying on its Bitcoin investments. The software division generates significant operating income, which he quantifies at about $75 million annually.
“We now have a very healthy software division and we’re very proud of that,” Saylor said. He noted that he has no plans to spin off MicroStrategi. “It’s profitable and a key part of the company’s identity.”
“We also now think of ourselves primarily as a Bitcoin Treasury company.” So our primary method of generating shareholder value is through our treasury operations,” Saylor noted.
“There are three ways to create shareholder value; there is operating income and our software business generates about $75 million a year in operating income. There is also investment income which is difficult to track. But we currently have $18.6 billion in unrealized investment income,” he added.
Saylor noted that MicroStrategi has “engaged” in strategic acquisitions similar to practices seen at other technology companies such as Apple.
MicroStrategi to re-evaluate equity strategy after $42 billion Bitcoin target
MicroStrategi has bought about $17 billion worth of bitcoin since announcing its plan to fund future bitcoin purchases for 21/21. At this rate of accumulation, the company could reach its goal of buying $42 billion in bitcoins by January 2025.
When asked about potential adjustments to the plan, Sailor indicated that MicroStrategi will reevaluate its capital allocation strategy once the $42 billion target is met.
“Once we get through the 21/21 plan, which has $42 billion in capital, we’ll revisit our capital plan and put a new plan in place based on market conditions at that time,” he said.
Sailor said the company expects to lean more toward raising capital through the fixed-income market in the coming quarter to increase leverage, which would boost returns for its shareholders.
While fixed income is the primary focus, they will also consider other options such as preferred stock, convertible bonds or equity-linked financing, depending on market conditions, Sailor says.
Will the S&P 500 be next?
MicroStrategi’s significant investments in Bitcoin led to its inclusion in the Nasdaq-100, but its entry into the S&P 500 seems unlikely due to its failure to meet the index’s profitability requirements. The company has only been profitable in one of the past four quarters, a key criterion for inclusion in the S&P 500, Bloomberg ETF analyst James Seiphart said. common in the statement.
Even so, upcoming changes by the Financial Accounting Standards Board may improve MicroStrategi’s financial reporting, according to the analyst.
Speaking about MicroStrategi’s potential inclusion in the S&P 500, Saylor noted that the decision-making process and specific criteria are beyond his expertise. However, he expressed optimism about future prospects.
“I’m optimistic that in 2025, when we adopt fair value accounting, we’ll end up with $50 billion in assets on our balance sheet, below fair value bitcoin is growing 20% a year, you’re looking at $10 billion a year in investment income,” Sailor said .
“I expect we will generate billions of dollars a year or tens of billions of dollars a year in investment income, which becomes GAAP profitability,” he added. “I think that’s the last thing people are looking for when joining the S&P.”
