MSTR CEO talks about being shorted: Citron doesn't understand where MSTR's premium over Bitcoin comes from

MicroStrategy CEO responds to short selling: The company currently earns $500 million a day and expects its stock price to rise 60% annually over the next 20 years.

Last Thursday, during U.S. stock trading, the well-known short-selling firm Citron Research posted on social media platform X, stating its intention to short "Bitcoin holder" MicroStrategy (MSTR). As a result, MicroStrategy's stock price plummeted, falling more than 21% from its daily high.

On Friday, MicroStrategy Executive Chairman Michael Saylor appeared on a CNBC media program, where he responded that the company is profiting from volatile trading while also leveraging through ATM operations, so as long as Bitcoin continues to rise, the company can still make money.

Wall Street View previously mentioned that ATM refers to at-the-market offerings, which means that a listed company gradually sells newly issued shares or shares it already owns to the secondary trading market at the current market price through designated brokers.

The premium of MSTR mostly comes from the ATM mechanism

Previous tweets indicated that Citron believes MicroStrategy's stock has become an alternative investment for Bitcoin, and its stock price has shown an unreasonable premium compared to the Bitcoin that drives its value, with trading significantly overheated, leading to the decision to short MicroStrategy.

In this interview, Michael Saylor stated that short-selling firms believe that once the premium and equity disappear, the source of profit will also vanish, but short sellers overlook an important profit point for MicroStrategy: the company invests in Bitcoin through leveraged financing, obtaining high returns from it.

Saylor explained that the company relies on Bitcoin as a "reactor" to provide power, profiting from volatile trading on one hand, and on the other hand, raising funds through bond issuance and increasing positions, borrowing to invest in Bitcoin through the ATM mechanism.

It is reported that the ATM model can flexibly raise funds, avoiding the significant discount issuance that occurs in traditional financing, making it particularly suitable for high-volatility stocks like MicroStrategy At the same time, MicroStrategy's high trading volume makes large-scale stock sales possible, with its stock market value having a 2.8 times premium relative to its Bitcoin holdings, creating arbitrage opportunities in financing.

Saylor stated, through ATM operations, MicroStrategy transfers the volatility, risk, and performance of fixed-income assets to common stock, allowing the company to achieve returns far exceeding borrowing costs and Bitcoin price increases.

"If we finance funds at an interest rate of 6% to invest in Bitcoin, when the Bitcoin price rises by 30%, what we actually get is an 80% Bitcoin price spread (a function of the combined stock premium, conversion premium, and Bitcoin premium)."

"The company issued $3 billion in convertible bonds, and based on an 80% Bitcoin price spread, this $3 billion investment can generate $125 per share in returns over 10 years."

This means that as long as the Bitcoin price continues to rise, the company can continue to profit:

"Two weeks ago, we executed $4.6 billion in ATM and traded at a 70% spread, which means we made $3 billion in Bitcoin in five days. About $12.5 per share. If calculated over 10 years, the returns will reach $33.6 billion, approximately $150 per share."

When discussing the risks that a potential decline in Bitcoin might bring, Saylor believes that investors who purchase MicroStrategy's stock implicitly accept the risk of Bitcoin potentially declining—if they want double returns, they must bear the corresponding risks.

Saylor further stated that the company currently earns $500 million daily and has become "the fastest-growing and most profitable company in America," expecting that over the next 20 years, Bitcoin prices will rise by 29% annually, and the company's stock price will rise by 60% annually.

So far this year, MicroStrategy's stock price has surged by 516%, nearly four times the 132% increase in Bitcoin during the same period, while AI leader Nvidia has seen a cumulative increase of 195% this year.