Strategy Trading at $73 Billion, 1.6x Value of Bitcoin Holdings

Strategy (NASDAQ: MSTR) has a market cap of $73 billion, approximately 1.6x its bitcoin holdings. This premium has sparked skepticism but is considered justified for three reasons:

• Strategy utilizes leverage from equity and debt to invest in bitcoin, earning a carry from the difference between bitcoin returns and cost of capital. Future expected returns are factored into MSTR’s market cap.
• It monetizes capital markets through convertible debt issuance and equity at a premium to book value, enhancing shareholder value. Last year, Strategy increased its bitcoin holdings per share by 74%, reaching 140,630 BTC valued at $14 billion.
• The strategy leverages the expanding cryptocurrency market, with bitcoin prices generally rising over time.

MSTR's BTC per share increased at an annual rate of 69% since August 2020, with guidance for a 15%+ increase this year and 6-10% in subsequent years. However, risks include price volatility and potential discounts during bear markets. The premium reflects investor belief in future growth of bitcoin per share.