Thread - Nostr Hypermedia

As I understand it: the simplified version of why you would pay a premium for MSTR compared to the underlying BTC is the expectation that the company will continue to increase the BTC per MSTR share; thus, eventually turning the initial premium you paid into a discount for the increased amount of BTC it represents. That sounds like a great deal, but how does the company increase the BTC per MSTR share?: It issues new shares at the premium price so that it can buy even more BTC at the market price; thus increasing the BTC per share ratio. And/or the company sells convertible bonds that effectively accomplishes the same thing - just with leverage on a longer timescale. In other words, if the flow of investors to buy new shares were ever to dry up, the later investors who hadn't yet seen their initial premium price turn into a discount price never will. This sounds like a ponzi scheme that must eventually run out of the new investors necessary to keep it going. It just happens to be a legal ponzi scheme without any apparent fraud or deception. Just make sure to go in with your eyes wide open to these realities. "Buyer beware, Freaks"

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Replies (3)

Bitcoin Graffiti bitcoingraffiti@iris.to 1 year ago

I wouldn't call it a ponzi, but indeed at a certain point stock demand will dry up, bye bye expected yields, and the stock will be highly overpriced. Stonks are forward looking. Whoever can model the rate change of BTC yield best wins.

Telluride Telluride@primal.net 1 year ago

MSTR is trading at a premium to its current NAV but at a discount to its future NAV.

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CitizenPleb citizenpleb@nostrplebs.com 1 year ago

If the flow of investors to buy new shares of any publicly traded company dries up that company is in trouble. If bitcoin keeps doing what it’s does (and it most likely will) it’s reasonable to expect that a company diligently executing a long corporate treasury strategy will also succeed and be handsomely rewarded. That said. If you own no corn and mostly or all MSTR, congratulations, you’ve chosen your stocks wisely, but you also own a publicly traded equity in layers of counterparty custodianship. You own no UTXOs, you can’t send it to family in another country, you can’t fight censorship with it, you can’t spin up a lightning channel with it or use it in a fedimint, or inscribe dick picks on it (would refrain from that one, but you do you) and you sure as shit cannot zap hilarious memes with it.

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