So serious question here.
I understand that MSTR has enough bitcoin to ultra cover its outstanding debt.
I also understand that MSTR is basically bitcoin volatility and dividend yield products wrapped around an unprofitable zombie software operating company.
SO - if MSTR is paying dividends on its derivative products (STRD, STRK, STRF) but MSTR is not selling Bitcoin and the operating company is unprofitable - WHERE DOES THE YEILD COME FROM TO PAY THE DIVIDENDS?
I ask people who are experts in traditional finance (and who are in MSTR or its circle of direct products / side products) to explain this to me in clear and simple English and the response I keep getting is “It’s too complicated, you wouldn’t understand”
Experience has taught me that this a very strong indicator of bullshit being afoot but perhaps I am missing something…
#plebchain #asknostr
Replies (6)
Here’s my guess: Strategy buys bitcoins, bitcoin hits ATH, stock becomes undervalued compared to bitcoin/share, strategy issues more shares for $, bitcoin does it’s 30%+ draw down, strategy buys shit tons more bitcoin … Bitcoin becomes more scarce + hype of the strategy buy and eventually bitcoin hits another all time high.
Also saylor wrote a white paper describing his process in detail so the info is out there.
The company is profitable, at launch of the strategy it was netting like $70M/year recent reported losses were probably mostly due to former accounting practices. That said, I imagine some of the yield will get paid by portions of the sale of the securities and probably primarily from the ATM sales of regular stock. I think they may have covered this in a quarterly video report, and likely do in the SEC filings, but that would be a slog to read.
Microstrategy is not unprofitable. They have positive cash flow.
All the other posts have covered all of your mistakes so I'll just add that one of the idea for the future sources of yield could be the use of bitcoin as collatral.
The company sells its shares and gets $$$. Something you or I cannot do.
My understanding is that if they don’t have cash from operations to cover the dividends they would issue more MSTR stock to cover it. I don’t know what other ways they have to do it and what impact a stock sale to cover dividend payments would have on the stock price and mNAV, but I’m guessing not a positive one.
