[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Sign-in] [Mail] [Setup] [Help]
Status: Not Logged In; Sign In
|
National News See other National News Articles Title: MicroStrategy (MSTR/STRK) now officially a Ponzi? Regardless what you think of Bitcoin, I think MSTR successfully did it, it qualifies for the official Ponzi-Scheme certificate. So MicroStrategy (the company that basically doesn’t do anything beside holding Bitcoin while trading at 1.5 it’s Bitcoin holding’s dollar price in market capitalization) issued a preferred stock called STRK. It looks like a Bond, it has a nominal value and it gets a “fixed dividend” of 8% annually, every quarter. But if you look at the very complicated prospectus at the SEC, it looks to me as if MicroStrategy doesn’t actually need to pay anything at any time. They can always “default” on the payment without anything happening other than that the dividend is added to the nominal value and still owed “later”, kind of like a credit card that can’t demand to pay the debt. So people, even in the crypto space, were asking how they are gonna pay their first dividends on the 500M$ of STRK that are due March 15th. Regardless of how Bitcoin develops, Michael Saylor, the CEO, repeats the mantra “never sell you Bitcoin” like in a cult. But MicroStrategy has no significant income, where should the money come from? One possibility was that they right away “default” on their first STRK dividends. Oopsy doopsy no money, who could have foreseen that. But the bond price would have collapsed and there is also an option to get one MSTR common share for 10 STRKs, so if the bond trades under 1/10 of the stock, yesterday morning around 250$/10=25$, that could be a risk. So instead Michael Saylor (the CEO) announced yesterday that MicroStrategy, now called Strategy, is issuing 21B$ more of those STRK worst-of-both-worlds bonds/stocks. A week before the dividends on the first batch is due. Saylor basically told everyone he is not going to sell Bitcoin, so the only conclusion is he has to borrow more to pay out earlier investors with later investors. If he pays the dividends in a week, there is no doubt where that money came from. Earlier investors payout with later investors, that’s the official definition of a Ponzi I’m sure if he had the option he would have waited with issuing the second batch of 21B$ STRK one fucking week to avoid this insanely strong Ponzi smell and pay those early batch STRK from whatever legitimate income MSTR has, but oops there is none. But who is gonna buy that junk? If you believe in Bitcoin mooning, why invest in an 8% bond instead? If you don’t believe in Bitcoin, why would you believe MSTR will magically come up with the money to pay you? The answer is: its made for people who are knee-deep in Bitcoin, bag holders, and very afraid of what happens to their Ponzi if the MSTR “Ponzi in a Ponzi” goes bust. It’s a threat to Bitcoin Bros to buy out all new Ponzi bonds otherwise Saylor might be “forced” to sell Bitcoin. But I think this might be the moment where the bubble bursts. Obviously the markets can be irrational, and specifically with crypto you’re playing poker with monkeys, you can’t bluff them because they don’t know what poker is. But bubbles tend to burst in an economic downturn. Those Bitcoin bros don’t have any cash left for Saylor’s Ponzi from buying the 7th Bitcoin dip. For Saylor it’s really dangerous if enough people understand this. The quicker his stocks plummets the harder it will be to sell these STRKs, as the 10:1 to-stock conversion looks more and more unattractive. If he can’t sell his junk bonds, game over. I have bought a few thousands in puts. I’m recent graduate PhD in Computer Science, I just started to make money and don’t have much to invest… I add my position as a comment Edit: People ask me in the comments: What’s new? Saylor doing Saylor things! The news is that everything before that was probably legal. In my opinion most crypto is mainly used as a way to pump and dump ponzis legally. So technically paying out old MSTR investors with new BTC investors wouldn’t be a ponzi (although we know it’s the same effectively). But what (I argue) he is doing instead, paying out old MSTR with new MSTR investors is really close to jail where I come from (Germany that is). While some old institutional investment managers might not understand BTC, they really will be able to spot the ponzi now. No income did fall from heaven, like they might have hoped. Post Comment Private Reply Ignore Thread
|
||
|
[Home]
[Headlines]
[Latest Articles]
[Latest Comments]
[Post]
[Sign-in]
[Mail]
[Setup]
[Help]
|
||