MicroStrategy: Between Bitcoin Betting and Software Ambitions

A previously quiet representative of the tech industry, MicroStrategy, experienced a remarkable transformation in recent years. Between 2010 and 2020, the company stagnated with an annual growth rate of only 0.6% and struggled to remain relevant compared to competitors like Salesforce. However, the tide turned in 2020 when co-founder Michael Saylor decided to invest $250 million in Bitcoin. Since then, MicroStrategy has steadily increased its Bitcoin holdings, swelling to a total of 279,420 Bitcoins as of November. This investment, amounting to $11.9 billion and currently valued at $28.3 billion, represents more than 30% of the company's current market capitalization. This makes MicroStrategy the largest Bitcoin holder among publicly traded companies worldwide today. This strategic realignment led to MicroStrategy's stock price rising by an impressive 2,590% within five years. An investment of $40,000 during this period would have turned into over a million dollars. Nevertheless, the question remains whether this growth will continue to be just as dynamic until 2050. To revitalize its core business, MicroStrategy is replacing traditional desktop applications with cloud-based subscriptions and expanding generative AI tools. However, this was not enough to prevent a 1% decline in total revenues in 2023. From 2023 to 2026, only marginal revenue growth of less than 1% is expected. Thus, its software activities remain the primary source of funding for further Bitcoin investments. Financially, the company is increasingly taking on debt, issuing more shares, and recording significant write-downs on its Bitcoin investments. The debt grew to $4.2 billion, an increase of $2.1 billion compared to the end of 2021. At the same time, the number of outstanding shares increased by 122% over the last five years. As long as these write-downs continue, analysts expect MicroStrategy to remain unprofitable under generally accepted accounting principles (GAAP) until 2026. Bitcoin enthusiasts see a golden future in MicroStrategy's bold move, while Saylor himself predicts that the Bitcoin price could rise to $13 million over the next 21 years. Analysts from VanEck, which is represented in the market with the VanEck Bitcoin ETF, even forecast an optimistic increase to up to $52 million by 2050.