MicroStrategy rides ‘red sweep’ to 477% gain in 2024, top tech stock

On the eve of MicroStrategy‘s inventory market debut in June 1998, founder Michael Saylor stayed in a penthouse suite on the Lotte New York Palace in Midtown Manhattan. Saylor, who was 33 on the time, says it was essentially the most beautiful lodge room he’d ever seen, paid for by lead underwriter Merrill Lynch.

The subsequent morning, Saylor went to the ground of the Nasdaq to look at his firm’s inventory open. He recalled seeing a observe scrolling throughout the ticker, warning merchants: “Please don’t confuse MSTR with MSFT.” The latter belonged to Microsoft, the software program large that had gone public 13 years earlier.

MicroStrategy shares popped 76% of their debut, becoming a member of the parade of tech corporations benefiting from the dot-com increase.

“It was a superb day,” Saylor informed CNBC.

Greater than 26 years later, MicroStrategy and Microsoft had been once more linked collectively, however for a wholly totally different purpose. In December 2024, Saylor stood earlier than Microsoft’s shareholders to attempt to persuade them that the corporate, now valued at greater than $3 trillion, ought to put a few of its $78.4 billion in money, equivalents and short-term funding into bitcoin.

“Microsoft cannot afford to overlook the following expertise wave, and bitcoin is that wave,” Saylor mentioned in a video presentation that he launched on X final week. The put up has greater than 3.6 million views.

Saylor has gone all in on that technique. MicroStrategy has bought 439,000 bitcoins since mid-2020, a stockpile that is now price about $42 billion and is the idea for the corporate’s market cap explosion to $82 billion from roughly $1.1 billion when the plan was put in place.

MicroStrategy’s software program unit, which focuses on enterprise intelligence, generates simply greater than $100 million in income 1 / 4. After zooming up in 1998 and 1999, the inventory crumbled within the dot-com bust, dropping nearly all its worth. Within the many years that adopted, it slowly bounced again earlier than rocketing up on account of bitcoin.

4 years into its bitcoin shopping for spree, MicroStrategy is the world’s fourth-largest holder, behind solely creator Satoshi Nakamoto, BlackRock’s iShares Bitcoin Belief and crypto change Binance.

At Microsoft, the shareholder vote supported by Saylor failed by a large margin — lower than 1% of its traders voted for it.

However the spectacle offered Saylor, now 59, with yet one more alternative to evangelise the gospel of bitcoin and tout the advantages of changing as a lot money as attainable into that single digital asset. It is a story that Wall Road has been gobbling up.

MicroStrategy shares are up 477% this yr as of Friday’s shut, second to solely AppLovin amongst all U.S. tech corporations valued at $5 billion or extra, in keeping with FactSet knowledge. That follows a 346% acquire in 2023.

Whereas the rally was in full pressure nicely earlier than November of this yr, Donald Trump’s election victory, funded closely by the crypto business, propelled the inventory much more. The shares have climbed 60% for the reason that Nov. 5 election, and at last exceeded their dot-com period excessive from 2000 on Nov. 11.

Saylor has lengthy talked about bitcoin in an evangelical trend and co-authored a e-book about it in 2022 titled “What’s Cash?” However his critics have gotten louder than ever of late, describing Saylor as a cult-like chief and his technique as a “ponzi loop” that includes issuing debt and fairness to purchase bitcoin, watching MicroStrategy’s inventory worth go up, after which doing extra of the identical.

“Wash, rinse, repeat — what may probably go unsuitable?” wrote Peter Schiff, chief economist and world strategist at Euro Pacific Asset Administration, in a Nov. 12 put up on X to his 1 million followers.

Saylor, who has 3.8 million followers, addressed the rising refrain of skeptics final week in an interview with CNBC’s “Cash Movers.”

“Similar to builders in Manhattan, each time Manhattan actual property goes up in worth, they challenge extra debt to develop extra actual property, that is why your buildings are so tall in New York Metropolis,” Saylor mentioned, in a clip that is been posted to X by his legion of followers. “It has been going for 350 years. I might name it an economic system.”

Saylor is a frequent visitor on CNBC, making appearances on varied packages all year long. He additionally agreed to 2 interviews with CNBC.com, one in September and one other quickly after the election.

The primary of these chats got here again on the Lotte, just some elevator stops from the penthouse the place he stayed the evening earlier than his inventory hit the Nasdaq. Saylor was delivering a convention keynote on the lodge and taking conferences on the aspect.

He wore a designer swimsuit and an orange Hermes tie, matching bitcoin’s designated shade. The election was lower than two months away, and crypto corporations had been pumping cash into the Trump marketing campaign after the Republican nominee and ex-president, who beforehand referred to as bitcoin a “rip-off towards the greenback,” began guaranteeing a way more crypto-friendly administration.

Two months earlier, in July, Trump delivered a keynote on the largest bitcoin convention of the yr in Nashville, Tennessee, the place he promised to fireside SEC Chair Gary Gensler, an business critic, and mentioned the U.S. would turn out to be the “crypto capital of the planet” if he gained.

“I believe the election yr has impressed the crypto group to search out its voice, and I believe it has catalyzed lots of enthusiasm that was latent,” Saylor mentioned within the September interview. “When Trump got here out tentatively constructive, that was an enormous enhance to the business. When he got here out absolutely constructive, that was one other enhance.”

Till this yr, MicroStrategy was one of many few methods many establishments may purchase bitcoin. As a result of MicroStrategy was an fairness, funding corporations did not want any particular provisions to personal it. The surroundings modified in January, when the SEC accredited spot bitcoin exchange-traded funds, permitting traders to purchase ETFs that monitor the worth of bitcoin.

Since Trump’s victory, it is all been up and to the correct. Bitcoin is up about 41% and BlackRock’s ETF has climbed 39%. Gensler is getting ready to go away the SEC, and Trump has picked deregulation advocate and former SEC Commissioner Paul Atkins to switch him.

Enterprise capitalist David Sacks, an outspoken conservative who hosted a fundraiser for Trump in San Francisco, would be the “White Home A.I. & Crypto Czar,” Trump introduced earlier this month in a put up on his Reality Social platform.

“With the pink sweep, bitcoin is surging up with tail winds, and the remainder of the digital property may also start to surge,” Saylor informed CNBC in a telephone interview, quickly after the election. He mentioned bitcoin stays the “protected commerce” within the crypto area, however as a “digital property framework” is put into place for the broader crypto market, “there will be a surge in your entire digital property business,” he mentioned.

“Taxes are coming down. All of the rhetoric about unrealized capital positive aspects taxes and wealth taxes is off the desk,” Saylor mentioned. “All the hostility from the regulators to banks touching bitcoin” additionally goes away, he added.

MicroStrategy has gotten much more aggressive with its bitcoin purchases. Saylor mentioned in a put up on Dec. 16, that over a six-day stretch beginning Dec. 9, his firm had acquired 15,350 bitcoins for $1.5 billion.

Thus far this yr, MicroStrategy has acquired 249,850 bitcoins, with nearly two-thirds of these purchases occurring since Nov. 11.

“We had been going to do it regardless,” Saylor mentioned, referring to the election outcomes. “However what was a headwind has turn out to be a tail wind.”

Every week earlier than the election, MicroStrategy introduced in its quarterly earnings launch a plan to boost $42 billion over three years. That included a inventory sale of as much as $21 billion by means of monetary corporations together with TD Securities and Barclays, opening up that rather more liquidity for bitcoin purchases.

Saylor informed CNBC it was “in all probability the only most necessary earnings name within the historical past of the corporate.”

No quantity of possession is an excessive amount of for Saylor, who predicted in September that bitcoin may hit $13 million by 2045, which might equal 29% progress yearly.

“We’ll simply hold shopping for the highest without end,” he mentioned in the identical TV interview the place he in contrast bitcoin to New York actual property. “Each day is an efficient day to purchase bitcoin. We have a look at it as cyber-Manhattan.”

Saylor talks glowingly about bitcoin as the inspiration of a brand new digital economic system that may solely get larger. However even since his bitcoin technique received underway in 2020, there have been pockets of extreme ache for traders — the inventory misplaced 74% of its worth in 2022 earlier than hovering the previous two years.

Nonetheless, he is advising corporations to imitate his technique. Microsoft did not pay attention, however Saylor mentioned there are many “zombie corporations,” with core companies that are not going wherever that might make higher use of their money.

“The standard recommendation could be, you do a transformational acquisition, you discover that you just want a merger associate. You are lifeless within the water. Go discover any person to merge with,” Saylor mentioned on the Lotte in September. “Bitcoin is the common merger associate, proper? The true attraction of digital capital is you’ll be able to repair any firm.”