Dozens of publicly traded companies, a media firm controlled by President Trump’s family, and meme stock poster child GameStop (GME) are all piling into a bet that Saylor used to turn a business intelligence software firm into a bitcoin juggernaut called Strategy (MSTR).
The blueprint developed by Saylor is to use a combination of debt and equity to add bitcoin to a company’s balance sheet — and lots of it.
Since Saylor first announced his plans to do so in August 2020, Strategy has amassed more than 580,000 bitcoins currently worth $40.6 billion and become the largest corporate holder of the world’s largest cryptocurrency.
His company’s stock has climbed more than 2,900%, far ahead of the S&P 500’s 76% gain.
Now, many imitators are trying to replicate that stock price success with their own big bets, adding bitcoin to their balance sheets even if their companies initially operated outside the cryptocurrency industry.
Since 2023, public companies have increased their exposure to the digital asset by 160% and now hold roughly 3.4% of all bitcoins in circulation, according to Bernstein analyst Gautam Chhugani.
In all, 80 companies have adopted the so-called “bitcoin standard” by holding bitcoin as part of their treasury reserves, according to Bernstein and data tracked by Coinkite. Many of them are issuing equity, leveraging debt, or a combination of both to fund their investments.
Recently, the limits for investor interest in such a play were tested. Last week, the stocks of Trump’s namesake media company Trump Media & Technology Group (DJT) and video game retailer GameStop each fell about 10% following separate announcements to amass bitcoin.
Trump Media unveiled plans to raise $2.5 billion to create what it claims will be one of the largest bitcoin treasuries held by any public company, noting it is part of a broader strategy to integrate digital assets across its media and financial ecosystem.
“We view bitcoin as an apex instrument of financial freedom,” Trump Media CEO and chair Devin Nunes said in the release.
GameStop, perhaps the best-known meme stock embraced by everyday investors during the early days of the COVID-19 pandemic, said it purchased 4,710 bitcoin — an investment valued at over $500 million at the time of the announcement.
GameStop and Trump Media — the parent company of social media platform Truth Social and streaming service Truth+ — are not the only firms outside of the cryptocurrency world making a pivot to Saylor’s approach.
Of the 80 firms that now hold bitcoin as part of their treasury reserves, at least 36 originated in sectors other than cryptocurrency, according to a Yahoo Finance review of company websites and filings.
That includes companies involved in everything from coal production and auto insurance to video gaming and online retail.
“It’s not complicated, it’s not even risky, in my opinion, it’s just novel.” Saylor last month said to an audience that showed up for an Orlando, Fla., conference focused on showing other firms how to adopt his bitcoin treasury strategy.
“If you want to 10x your money, you buy bitcoin. If you want 100x your money, you buy bitcoin with someone else’s money. If you want to 1000x your money, you buy bitcoin with someone else’s money and then you leverage the bitcoin,” he added.
The stock market’s consolidation into the major tech giants has eliminated the chances for smaller firms to give their shareholders returns in line with major stock indexes, he told the audience of corporate treasurers, financial officers, and other executives.
Michael Saylor speaks on stage during Bitcoin Conference 2023 in Miami Beach, Fla. (Photo by Jason Koerner/Getty Images for Bitcoin Magazine) ·Jason Koerner via Getty Images
Bitcoin, Saylor explained, was their best chance out of this predicament.
“MSTR’s Bitcoin acquisition playbook demonstrates how small-low growth companies can optimize capital allocation from a low growth business to a high yielding BTC treasury,” wrote Bernstein’s Chhugani in a May report.
“Since there is no visible road ahead for value creation” at those firms, and “the success of the MSTR model offers them a rare value creation path, these companies are uniquely positioned to adopt Strategy’s Bitcoin playbook,” Chhugani added.
There are risks to this approach, however, since bitcoin can be volatile.
The price of bitcoin is up roughly 57% over the past year and rose as high as over $109,000 in January. But the price also plummeted below $80,000 in April as Trump’s trade war roiled the stock market before it recovered again.
“The main risk in running a leveraged ‘bitcoin treasury’ strategy is that a rapid drop in the price of bitcoin would lead to a possibility of bankruptcy,” NYU Stern School of Business professor David Yermack told Yahoo Finance.
Another challenge is that “MSTR’s scale is hard to replicate,” Chhugani wrote. “Not every Bitcoin treasury will be successful simply replicating MSTR’s playbook, in our view.”
The risks aren’t dimming the enthusiasm of investors who have poured billions into companies making some version of Strategy’s bets in the past several months, and some of the biggest players haven’t even launched.
“I’m personally curious to see how the market is going to figure us out,” Jack Mallers, CEO of Twenty One Capital Inc., a soon-to-be public company imitating Saylor’s Strategy with backing from Japanese investment firm SoftBank, stablecoin issuer Tether Holdings, and Wall Street investment bank Cantor Fitzgerald LP.
Twenty One has raised $685 million in capital from private investors by issuing both debt and equity, making it the third-largest bitcoin holding company.
It plans to list via a special purpose acquisition vehicle spun up by Cantor called Cantor Equity Partners (CEP).
The stock price for this investment vehicle has climbed 300% since its April announcement.
While admitting doubts that all firms imitating Strategy will make it, Mallers pointed to bitcoin’s 16-and-a-half-year track record as the clearest signal for his firm’s future success.
“Investors should always be careful assuming they’re intellectually superior to the market,” Mallers said. “That’s how you get yourself burned.”
Donald Trump at the 2024 Bitcoin Conference in Nashville, Tenn. (Photo by Johnnie Izquierdo for The Washington Post via Getty Images) ·The Washington Post via Getty Images
Another Strategy follower, Nakamoto Holdings, wants to add another layer of complexity to the bitcoin treasury scheme when it officially launches in the third quarter through a reverse merger. The plan is to acquire and become a maker of more Strategy imitators.
David Bailey, a crypto adviser to Trump and founder of BTC Inc., will run the company as CEO post-merger. He said in an interview last month that Nakamoto is seeking to turn 25 separate public companies into Strategy imitators “within the year.”
“We’re inspired by Michael Saylor, but we’re not just running the bitcoin treasury play,” Bailey told Yahoo Finance.
Nakamoto, which will trade under the ticker NAKA, saw its fundraising surge in reaction to Twenty One Capital’s announcement. Through a mix of equity and short-term loans from private investors, including Chinese crypto billionaire Jihan Wu, the company has raised $710 million, according to its press release.
KindlyMD, the healthcare software company Nakamoto is using as a vehicle for quick public listing, has seen its stock climb 370% since the May 12 announcement.
“Frankly, it’s almost like the meme stock phenomenon where we know people are piling in just because it has worked for MicroStrategy,” said Columbia Business School professor Omid Malekan.
“Whatever benefit there is to be had in a number-go-up market could become problematic in a number-go-down market.”
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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