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MicroStrategy CEO defends Bitcoin purchases, evaluating that to an early funding in Fb

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MicroStrategy CEO Michael Saylor on Friday defended his enterprise software company’s debt-financed Bitcoin purchases, telling CNBC that he saw buying the cryptocurrency right now as akin to investing in Facebook in the early days of social networking.

“We have $ 2.2 billion in debt and pay about 1.5% interest, and we have a very long time horizon,” said Saylor in Squawk on the Street. “Our position is that it is a good thing for our shareholders to be a leveraged, long bitcoin company.”

MicroStrategy made prominence on Wall Street last year after the Virginia-based company began buying and holding Bitcoin, initially with cash on its balance sheet to purchase the digital tokens before moving into the debt market to make further purchases. Saylor’s own profile skyrocketed when the executive evangelized what he believed to be the great potential of Bitcoin and compared it to “digital real estate.”

Some people are very skeptical of MicroStrategy’s Bitcoin bet, concerns that have only been heightened in recent months as the world’s largest cryptocurrency by market value has weathered a period of weakness.

“When you borrow billions of dollars at 1% interest and invest in the next big tech digital network that you thought Amazon or would be dominant [Alphabet’s]Gugg Google or Facebook money, why not? “Said Saylor.” I mean, if I could borrow a billion dollars a decade ago and buy Facebook for 1% interest, I would have done pretty well. “

Facebook went public in 2012, about eight years after it was founded. Its public debut got off to a bumpy start, but has since grown into a company with a market value of more than $ 1 trillion.

Michael Saylor, CEO of MicroStrategy, speaks at the Bitcoin 2021 Convention, a cryptocurrency conference held at the Mana Convention Center in Wynwood, Miami, Florida on June 4, 2021.

Joe Raedle | Getty Images

MicroStrategy shares are up about 400% over the past 12 months, despite the fact that the stock has more than halved since it was valued at $ 1,315 on February 9.

The company’s first bitcoin purchase was announced on August 11th last year, purchasing 21,454 bitcoins for a total of $ 250 million including fees and expenses. In August last year, Bitcoin was trading in the low $ 11,000 range.

On June 30, when the company’s second quarter ended, MicroStrategy held a total of 105,085 bitcoins for a total price of $ 2.7 billion. This bitcoin treasure was valued at around $ 4 billion, based on Friday’s trading price of around $ 39,000, according to Coin Metrics.

Bitcoin hit an all-time high of nearly $ 65,000 per token in mid-April, which coincided with the excitement over the blockbuster direct listing of the Coinbase crypto exchange, which fizzled out after an initial bang. Bitcoin has also struggled since then, falling below $ 30,000 twice.

“Everyone is looking for this open way of storing and moving values ​​with a computer chip and a mobile phone at the speed of light,” said Saylor. “They had Google. You created digital books. They had Facebook; they created digital communication. Apple gave us digital music and Amazon gave us digital retail. Bitcoin is digital property in a large technology, open currency network. “

“In our view, it is only a matter of time before billions and billions of people put cell phones into Bitcoin, and we just want to be there first,” added Saylor.

In further defending the company’s bitcoin game, Saylor said it supported MicroStrategy’s core business intelligence software business. For the second quarter, total revenue increased 13% year over year to $ 125.4 million. That’s 6% more than in the second quarter of 2019, when the coronavirus pandemic hadn’t yet disrupted the global economy.

“It’s a door opener,” Saylor said of the company’s Bitcoin Association. “It is very important that people know who you are. This is where the conversation begins. It’s been great for our enterprise software business and also for employee morale. “

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