MSTR is levered 2.2X, which means that IF bitcoin goes to roughly 31-32K, the intrinsic value of MSTR stock would approach zero.
They would probably not go bust, but they would probably lose 70-90% of their market cap in this scenario.
How likely is the "deleveraging"..maybe unlikely right now, albeit JPM started making noises about it.
https://decrypt.co/221873/microstrategy-bitcoin-buys-severe-deleveraging-jp-morganMaybe they want "in" on this deal, lol.
I doubt that it is as easy to break MSTR as JP Morgan would like to speculate, and maybe that is what Saylor is trying to get some of the BIG cats to do, which surely will bring the destruction and demise of the BIG cats a lot faster than they are already on a worse train than the bitcoin train seems to be the place to be, even if Saylor is seeming a wee bit psycho in recent times..
Exactly. Think of Robinhood and Gamestop vs. hedge funds. The epic short squeeze/gamma squeeze that happened has made some cold blooded "diamond hands" quite a bit richer. I made a few dimes myself by joining the wagon when it had just started.
These funds were shorting Gamestop because they thought the company was toast so they saw an opportunity. A few apes coordinated on Reddit to keep buying buying buying, 10 dollars at a time. That wouldn't have been enough on itself, but the original apes had done much better than that - they'd bought a lot (I mean a lot) of out-of-the-money call options. Options in general have intrinsic multiplier properties: $1 of options could easily move $100 of stock or more. What happened is the apes made quite a killing - both original apes and "I jumped on the wagon later on" apes.
Now I don't even know if MicroStrategy is listed on any significant option exchange, but I bet Saylor has some safety net ready. Imagine short squeezing/gamma squeezing JPMorgan and buying back the stock you sold to buy bitcoin at half the price.
Interesting times ahead, gentlemen. Get your popcorn ready. And if the (pop)corn shop has cheap MSTR out-of-the-money calls, maybe grab a couple bags of those too. Worst case, you'll lose a few hundred. Best case, you'll gain a few thousands.
Have you read till the end? Good. So where's your popcorn?