Bitcoin bull Michael Saylor made $370 million from MicroStrategy sales

MicroStrategy Bitcoin founder and evangelist Michael Saylor entered into a stock sale plan with his company last summer that saw him sell up to 400,000 shares in the first four months of 2024.

It was a timely deal for the 59-year-old crypto billionaire.

With the plan more than 90% complete, Saylor has earned about $370 million from this year’s stock sales, thanks to the stratospheric increase in the value of MicroStrategy, which is effectively a Bitcoin investment company.

Saylor, who started MicroStrategy in 1989 as a software and technology consulting firm and is still its president, has become a bitcoin hero in recent years, telling CNBC last month that the cryptocurrency would “eat gold”. His company has used its balance sheet and tapped capital markets to acquire more than 214,000 bitcoins since announcing its crypto market entry strategy in mid-2020.

These assets, which represent approximately 1% of the total number of bitcoins issued to date, are now worth approximately $13.6 billion, representing the bulk of MicroStrategy’s $21.3 billion market capitalization. The stock has been a Wall Street darling of late, climbing 91% this year – despite falling 37% from its March peak – after soaring 346% in 2023, one of the best performers in the American stock market.

Saylor is MicroStrategy’s largest shareholder, with Class B holdings worth approximately $2.3 billion. At the end of 2023, Saylor owned an additional 400,000 shares of Class A stock through an option he received in 2014. These are the shares he is quickly selling.

Buried near the end of its third-quarter earnings release on Nov. 1, MicroStrategy announced that the company and Saylor had entered into an agreement, called a 10b5-1 plan, in September, allowing the founder to sell up to 5,000 shares every year. trading day from January 2 to April 25 this year, for a total of 400,000 shares. The shares were tied to a “vested stock option, which expires if not exercised on April 30, 2024.”

This week, Saylor sold 370,000 shares for a total of $372.7 million, according to filings. His Class A holdings fell to 30,000 shares in the latest sale disclosed Thursday.

MicroStrategy did not respond to requests for comment.

Mark Palmer, an analyst at Benchmark, called the stock sales “entirely programmatic” due to the business plan executed last year and do not at all reflect Saylor’s confidence in MicroStrategy or his view of the stock price .

There is, however, a different point of view in the world of retail investors. Many articles on Reddit suggest that Saylor may be selling for other reasons, with some members of the r/MSTR subreddit speculating that he is using the money to buy bitcoin directly. Some say they sell with Saylor. The stock is down 29% in April, while bitcoin is down 11%.

Palmer, who has a “buy” rating on the stock, countered that such a view “would be a misinterpretation” by investors and traders.

“What we see here is very simple and all of this has already been disclosed,” Palmer said. “It’s easy for those who don’t understand the details or for those who understand the details but are short on the stock to tweak things a bit. As is usually the case, it’s pretty easy to find the truth.”

Even with the stock sales, the majority of Saylor’s wealth remains concentrated in his MicroStrategy Class B holdings, as well as the 17,732 bitcoins he purchased in 2020 that are currently worth around $1.1 billion. dollars.

Much of the rise in Bitcoin and related investments is linked to the emergence of Bitcoin exchange-traded funds, which received regulatory approval earlier this year, and their halving this week. The technical event occurs every four years, cutting rewards for bitcoin miners in half and reducing the pace at which new bitcoins enter the market.

In a market where consumers can buy Bitcoin directly on various exchanges or choose a host of new ETFs, Saylor said MicroStrategy’s continued advantage is that it is a no-fee leveraged Bitcoin play Management. The company may raise funds to further its crypto research, and said last month he raised $782 million “to acquire additional bitcoins.” The money came from a sale of convertible debt at an interest rate of 0.625%.

“Is there a company in the world that you wouldn’t want to invest in that could borrow $1 billion at less than 1% interest to invest in your best idea?” Saylor said on CNBC’s “Squawk Box” in March. He added that the company’s debt leads to volatility that “attracts capital, and then we can get more of it.”

Benchmark’s Palmer said there are plenty of reasons to remain bullish on MicroStrategy, especially with the halving fast approaching. Following previous halving events, the price of Bitcoin surged.

“If I was in a situation where I had stock in MicroStrategy, I would definitely want to hold on to it,” Palmer said.