pull down to refresh
61 sats \ 4 replies \ @freetx 20h \ parent \ on: The end of the MSTR party? bitcoin
The biggest problem Bitcoin Treasury Companies have is not obvious on first look. Their biggest problem is shareholder have no access to their fundamental NAV.
If you buy a share of MSTY and it dips below NAV, what can you do as a shareholder? The concept of "efficient markets" and "valuations" is great, but at the end of the day an electronic stock certificate really means nothing. The stock can dip below NAV forever and there is not much you can do as an equity holder to access that underlying asset....about the only thing is to oust the CEO and install one who promises to sell the assets to raise cash to do a stock buyback.
But that itself is double-edged sword. If stock price is below NAV with the current assets....what will stock price do after new-CEO sells the assets? In theory the price should rise if he is promising to buy back stock with the cash....but well the market already doesn't value the NAV story....so good luck.
In the end, the entire stock market is you giving your cash to some random 3rd party and hoping you get something back in return....ultimately stocks are a bigger fiat than "fiat".
No one buys a stock with the expectation of access to the contents of the company's treasury, when the company is still operating. Traders are free to buy and sell the stock as they wish, according to NAV or any other criteria.
Strategy is executing a speculative attack on the dollar by leveraging the equities market to accumulate bitcoin. Raising unlimited dollars to buy limited bitcoins. If you think the price of BTC is going to rally, MSTR might rally even more. And vice versa, in the other direction.
reply
No one buys a stock with the expectation of access to the contents of the company's treasury
Then what are you buying?
If you think the price of BTC is going to rally, MSTR might rally even more.
well.....the price of MSTR is already below NAV, so what will BTC rallying do it? Maybe it rises at 0.9x NAV?
Imagine I sold you "shares in a gold mine" but I made it clear there was no possible way you would ever be allowed to access the gold, in fact I forbade you from even looking at it...would you do it? If so, I have a gold mine to sell you.