Michael Saylor, the founder of MicroStrategy and a big supporter of Bitcoin, made a deal last summer with his company. This deal let him sell up to 400,000 shares of MicroStrategy in the first four months of 2024.
This was a good move for Saylor, who is now 59 years old and a billionaire because of his investments in cryptocurrency.
With this plan nearly finished, Saylor has made around $370 million from selling his shares this year. MicroStrategy’s value has gone way up, mainly because it’s heavily invested in Bitcoin.
Saylor started MicroStrategy in 1989 as a tech consulting company and still leads it as chairman. He’s become known as a big supporter of Bitcoin. He said recently on CNBC that Bitcoin will become more valuable than gold. Since 2020, MicroStrategy has been buying a lot of bitcoins, using its money and raising funds from investors.
The company now owns over 214,000 bitcoins, which is about 1% of all bitcoins that exist. These bitcoins are now worth about $13.6 billion, which is most of MicroStrategy’s total value of $21.3 billion.
The company’s stock has been doing well on Wall Street, going up 91% this year and 346% in 2023, making it one of the best-performing stocks in the US.
Saylor is the biggest shareholder in MicroStrategy, owning Class B shares worth about $2.3 billion. He also owns 400,000 Class A shares, which he got from an option in 2014. Those are the shares he’s selling quickly now.
Buried in MicroStrategy’s third-quarter earnings filing on November 1st, the company revealed that they had agreed with Saylor. This agreement, called a 10b5-1 plan, was made in September.
It allowed Saylor to sell up to 5,000 shares every trading day from January 2nd to April 25th of this year, totaling up to 400,000 shares. These shares were connected to a vested stock option, which would expire if not used by April 30th, 2024.
So far, Saylor has sold 370,000 shares, making $372.7 million. According to the latest filings, he now holds only 30,000 Class A shares after the recent sale.
MicroStrategy hasn’t commented on this matter.
Analyst Mark Palmer from Benchmark believes that these stock sales were part of a planned strategy. They were not a reflection of Saylor’s confidence in MicroStrategy or his opinion of the stock price.
However, some retail investors have a different perspective. Many posts on Reddit suggest that Saylor might be selling for other reasons. Some members of the r/MSTR subreddit speculate that he might be using the money to directly buy bitcoin. Some even claim they’re selling their shares along with Saylor. In April, the stock dropped by 29%, while bitcoin fell by 11%.
Unraveling the MicroStrategy Stock Sales: Insights into Saylor’s Strategy and Bitcoin’s Rise
“Easy enough to find the truth,” Palmer, who has a “buy” rating on the stock, disagreed with this view, saying it would be misunderstood by investors and traders.
“What we’re seeing here is very straightforward and all of it’s been disclosed already,” Palmer said to CNBC.
“It’s easy for those who either may not understand the details or those who understand the details but might have a short on the stock to twist things around a bit. As is typically the case, it’s easy enough to find the truth.”
Even though Saylor has sold some of his stock, the majority of his wealth is still tied up in his Class B holdings of MicroStrategy, along with the 17,732 bitcoins he bought in 2020, which are currently worth about $1.1 billion.
The recent rise in bitcoin and related investments is partly due to the approval of bitcoin exchange-traded funds earlier this year, as well as an upcoming event called the halving.
This event, which occurs every four years, reduces rewards for bitcoin miners and slows down the creation of new bitcoins.
In a market where people can buy bitcoin directly or choose from new ETFs, Saylor believes MicroStrategy has an advantage. It’s like investing in Bitcoin, but without paying management fees. The company can raise money to invest more in crypto. Last month, it raised $782 million to buy more bitcoin through a convertible debt sale at an interest rate of 0.625%.
“Is there any company in the world that you wouldn’t like to invest in that could borrow $1 billion at less than 1% interest to invest in your best idea?” Saylor said on CNBC’s “Squawk Box” in March. He also mentioned that the company’s leverage leads to volatility, which attracts capital and allows them to leverage more.
Palmer from Benchmark believes there are many reasons to be optimistic about MicroStrategy, especially with the halving coming up. Historically, after halving events, the price of bitcoin has risen.
“If I were in a situation where I had shares in MicroStrategy, this is a time where I’d very much want to be holding onto them,” Palmer said.
