MicroStrategy rides ‘red sweep’ to 477% gain in 2024, top tech stock

On the eve of MicroStrategy‘s inventory market debut in June 1998, founder Michael Saylor stayed in a penthouse suite on the Lotte New York Palace in Midtown Manhattan. Saylor, who was 33 on the time, says it was essentially the most beautiful resort room he’d ever seen, paid for by lead underwriter Merrill Lynch.

The subsequent morning, Saylor went to the ground of the Nasdaq to observe his firm’s inventory open. He recalled seeing a word scrolling throughout the ticker, warning merchants: “Please don’t confuse MSTR with MSFT.” The latter belonged to Microsoft, the software program large that had gone public 13 years earlier.

MicroStrategy shares popped 76% of their debut, becoming a member of the parade of tech firms benefiting from the dot-com growth.

“It was an excellent day,” Saylor instructed CNBC.

Greater than 26 years later, MicroStrategy and Microsoft have been once more linked collectively, however for a completely totally different motive. In December 2024, Saylor stood earlier than Microsoft’s shareholders to attempt to persuade them that the corporate, now valued at over $3 trillion, ought to put a few of its $78.4 billion in money, equivalents and short-term funding into bitcoin.

“Microsoft cannot afford to overlook the following expertise wave, and bitcoin is that wave,” Saylor mentioned in a video presentation that he released on X final week. The put up has greater than 3.6 million views.

Saylor has gone all in on that technique. MicroStrategy has bought 439,000 bitcoin since mid-2020, a stockpile that is now price about $42 billion and is the idea for the corporate’s market cap explosion to $82 billion from roughly $1.1 billion when the plan was put in place.

MicroStrategy’s software program unit, which makes a speciality of enterprise intelligence, generates simply over $100 million in income 1 / 4. After zooming up in 1998 and 1999, the inventory crumbled within the dot-com bust, dropping virtually all its worth. Within the many years that adopted, it slowly bounced again earlier than rocketing up on account of bitcoin.

4 years into its bitcoin shopping for spree, MicroStrategy is the world’s fourth-largest holder, behind solely creator Satoshi Nakamoto, BlackRock’s iShares Bitcoin Trust and crypto change Binance.

At Microsoft, the shareholder vote supported by Saylor failed by a large margin — lower than 1% of its traders voted for it.

However the spectacle supplied Saylor, now 59, with yet one more alternative to evangelise the gospel of bitcoin and tout the advantages of changing as a lot money as doable into that single digital asset. It is a story that Wall Road has been gobbling up.

MicroStrategy shares are up 477% this 12 months as of Friday’s shut, second to solely AppLovin amongst all U.S. tech firms valued at $5 billion or extra, in response to FactSet information. That follows a 346% acquire in 2023.

Whereas the rally was in full pressure nicely earlier than November of this 12 months, Donald Trump’s election victory, funded closely by the crypto trade, propelled the inventory much more. The shares have climbed 60% because the Nov. 5 election, and eventually exceeded their dot-com period excessive from 2000 on Nov. 11.

Saylor has lengthy talked about bitcoin in an evangelical style and co-authored a e book about it in 2022 titled “What’s Cash?” However his critics have gotten louder than ever of late, describing Saylor as a cult-like chief and his technique as a “ponzi loop” that entails issuing debt and fairness to purchase bitcoin, watching MicroStrategy’s inventory value go up, after which doing extra of the identical.

“Wash, rinse, repeat — what may presumably go improper?” wrote Peter Schiff, chief economist and international strategist at Euro Pacific Asset Administration, in a Nov. 12 post on X to his 1 million followers.

Saylor, who has 3.8 million followers, addressed the rising refrain of skeptics final week in an interview with CNBC’s “Cash Movers.”

“Similar to builders in Manhattan, each time Manhattan actual property goes up in worth, they difficulty extra debt to develop extra actual property, that is why your buildings are so tall in New York Metropolis,” Saylor mentioned, in a clip that is been posted to X by his legion of followers. “It has been going for 350 years. I’d name it an financial system.”

Saylor is a frequent visitor on CNBC, making appearances on numerous applications all year long. He additionally agreed to 2 interviews with CNBC.com, one in September and one other quickly after the election.

The primary of these chats got here again on the Lotte, just some elevator stops from the penthouse the place he stayed the night time earlier than his inventory hit the Nasdaq. Saylor was delivering a convention keynote on the resort and taking conferences on the facet.

He wore a designer swimsuit and an orange Hermes tie, matching bitcoin’s designated coloration. The election was lower than two months away, and crypto firms have been pumping cash into the Trump marketing campaign after the Republican nominee and ex-president, who beforehand referred to as bitcoin a “scam against the dollar,” began guaranteeing a way more crypto-friendly administration.

Two months earlier, in July, Trump delivered a keynote on the greatest bitcoin convention of the 12 months in Nashville, Tennessee, the place he promised to fireplace SEC Chair Gary Gensler, an trade critic, and mentioned the U.S. would turn into the “crypto capital of the planet” if he received.

“I feel the election 12 months has impressed the crypto group to search out its voice, and I feel it has catalyzed a variety of enthusiasm that was latent,” Saylor mentioned within the September interview. “When Trump got here out tentatively optimistic, that was an enormous enhance to the trade. When he got here out absolutely optimistic, that was one other enhance.”

Till this 12 months, MicroStrategy was one of many few methods many establishments may purchase bitcoin. As a result of MicroStrategy was an fairness, funding companies did not want any particular provisions to personal it. The setting modified in January, when the SEC approved spot bitcoin exchange-traded funds, permitting traders to purchase ETFs that observe the worth of bitcoin.

Since Trump’s victory, it is all been up and to the correct. Bitcoin is up about 41% and BlackRock’s ETF has climbed 39%. Gensler is making ready to go away the SEC, and Trump has picked deregulation advocate and former SEC Commissioner Paul Atkins to interchange him.

Enterprise capitalist David Sacks, an outspoken conservative who hosted a fundraiser for Trump in San Francisco, would be the “White Home A.I. & Crypto Czar,” Trump announced earlier this month in a put up on his Fact Social platform.

“With the crimson sweep, bitcoin is surging up with tailwinds, and the remainder of the digital property will even start to surge,” Saylor instructed CNBC in a telephone interview, quickly after the election. He mentioned bitcoin stays the “protected commerce” within the crypto house, however as a “digital property framework” is put into place for the broader crypto market, “there will be a surge in your entire digital property trade,” he mentioned.

“Taxes are coming down. All of the rhetoric about unrealized capital positive factors taxes and wealth taxes is off the desk,” Saylor mentioned. “The entire hostility from the regulators to banks touching bitcoin” additionally goes away, he added.

MicroStrategy has gotten much more aggressive with its bitcoin purchases. Saylor mentioned in a post on Dec. 16, that over a six-day stretch beginning Dec. 9, his firm had acquired 15,350 bitcoin for $1.5 billion.

To date this 12 months, MicroStrategy has acquired 249,850 bitcoin, with virtually two-thirds of these purchases occurring since Nov. 11.

“We have been going to do it regardless,” Saylor mentioned, referring to the election outcomes. “However what was a headwind has turn into a tailwind.”

Per week earlier than the election, MicroStrategy introduced in its quarterly earnings release a plan to boost $42 billion over three years. That included a inventory sale of as much as $21 billion by monetary companies together with TD Securities and Barclays, opening up that rather more liquidity for bitcoin purchases.

Saylor instructed CNBC it was “most likely the only most vital earnings name within the historical past of the corporate.”

No quantity of possession is an excessive amount of for Saylor, who predicted in September that bitcoin may hit $13 million by 2045, which might equal 29% progress yearly.

“We’ll simply preserve shopping for the highest perpetually,” he mentioned in the identical TV interview the place he in contrast bitcoin to New York actual property. “Daily is an efficient day to purchase bitcoin. We take a look at it as cyber-Manhattan.”

Saylor talks glowingly about bitcoin as the inspiration of a brand new digital financial system that can solely get greater. However even since his bitcoin technique received underway in 2020, there have been pockets of extreme ache for traders — the inventory misplaced 74% of its worth in 2022 earlier than hovering the previous two years.

Nonetheless, he is advising firms to imitate his technique. Microsoft did not pay attention, however Saylor mentioned there are many “zombie firms,” with core companies that are not going anyplace that might make higher use of their money.

“The standard recommendation could be, you do a transformational acquisition, you discover that you just want a merger companion. You are lifeless within the water. Go discover someone to merge with,” Saylor mentioned on the Lotte in September. “Bitcoin is the common merger companion, proper? The true attraction of digital capital is you’ll be able to repair any firm.”

WATCH: CNBC’s full interview with MicroStrategy CEO Michael Saylor