One year ago, MicroStrategy was a mundane, third-tier publicly traded software concern with a moribund stock price that hadn’t moved in nearly two decades. Then the CEO decided to dump most of his treasury into Bitcoin. The the stock went from 100 to 1000. Now he’s doing a convertible bond offering (more free money) with the express purpose of buying more Bitcoin. He’s not even pretending to invest in his company’s software products. He’s not working on productivity nor innovation. He’s simply creating value out of thin air through a massive bet on asset price inflation. Equity money is free. No interest rate to repay. The only cost is dilution of the existing shareholder base. But the existing shareholder base is probably 100% Bitcoin Zealot, so give the people what they want. They want more f***ing Bitcoin. “Drown us in it, if you please, sir.” Dilute them for the right reason and they will reward you with an even higher share price ex-post.

 

https://thereformedbroker.com/2021/02/17/the-big-long/