0 sats \ 7 replies \ @elvismercury 1 Nov 2023 \ on: MicroStrategy Announces Q3 2023 Financial Results; now Holds 158K BTC in Total bitcoin
I've read analyses about what MSTR needs to happen from a btc price perspective to stay out of trouble and meet their various loan obligations. Anyone have a link handy? If I remember right, it was a bit precarious for a while. Are they out of the woods at $35k?
I think so...
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They no longer have any loans with BTC acting as collateral (the $200M loan from Silvergate was repaid at a discount).
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As of now their average cost basis is $29.5k / BTC, and they are currently sitting on $900M profit (which is x7 their annual revenue).
I'm not seeing any major risk factors. Some people are speculating that the stock will take a hit if ETFs are approved. I could see it losing a premium of sorts, but I'm not sure that will impair their ability to service the debt. They still have the software business and a shit load of corn.
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I vaguely remember reading the price would have to go below $4k for them to get liquidated.
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Holy shit, that low? I thought it was much higher than that, like at $15k they were in deep shit. Maybe someone has a link to whatever the analysis I'm thinking of is...
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Although MicroStrategy owns 129,218 BTC, 115,109 BTC are unencumbered and available to be put as additional collateral if needed. With a $410 million collateral requirement in its loan, this amount of bitcoin would be enough to avoid a margin call if the bitcoin price sustained above $3,562. However, Saylor added that the company wouldn’t sell even if that level got breached.
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A margin call is a forced sale, so I'm not sure what the last sentence means.
Maybe it's that the terms of the loan are flexible enough that if it wicks below that level briefly they won't get liquidated.
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Read the article, it continues with this:
“If the price of BTC falls below $3,562 the company could post some other collateral,” he wrote in the same tweet.
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Yes that was on the silvergate loan in any case, which they have since paid off entirely. It was always noise as they could have posted yet more collatoral, though it wouldn't have been good at that low $3k level.
The main risks really were (and still are) refinancing when each of the loans becomes due for repayment. I tried to break this down in the article below -
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