Michael Saylor’s MicroStrategy In Trouble After Bitcoin Nosedive
During a first quarter earnings call, MicroStrategy’s CFO Phong Le had to admit that the company had taken out a $205 million loan from Silvergate, a crypto-focused bank, in order to allow CEO Michael Saylor to continue his bitcoin buying spree.
The loan became famous as it contained a “margin call,” a situation where the investor has to commit more funds to avoid losses on the loan, if a certain point is passed. For Microstrategy, that point is now passed after Bitcoin’s nosedive of Monday. We wrote about the possibility of a Microstrategy ‘margin call from hell’ for Saylor about a month ago. By now, everyone has picked up on it.
Of course, Saylor has been here before. The current losses of Microstrategy are nothing compared to what it lost during the DotCom bubble. Back then MicroStrategy mistakenly reported a profit to the market when it actually made a loss. After later admitting the fiasco to investors, they punished him by taking $11 billion off MicroStrategy’s stock market value in a single day.
Everyone please understand finally: Michael Saylor is NOT going to be liquidated on his #BTC!— MMCrypto (@MMCrypto) June 13, 2022
Fast forward to 2020 and Saylor became the darling of the cryptosphere. His company was one of the first, way before Paypal and Block would make it fashionable to do so, that purchased Bticoin to keep it on it’s books. In early 2021, he even convinced Elon Musk to buy some for Tesla (or so the legend goes). At the time, Microstrategy’s stock traded at $1,000.
As Saylor took in the revelation of the crypto crowd, he started betting more and more of
MicroStrategy money and bet is on Satoshi Nakamoto’s coin. In all, Microstrategy purchased some $3.97 billion or 129,218 bitcoins. His average purchase price was $30,700.
Bitcoin’s fall on Monday meant Saylor saw a $1 billion loss in a single day. He responded by changing his profile pic to laser eyes, meaning he still believed Bitcoin would come out victorious.
With Bitcoin now trading at $21,000, Wall Street is waiting for a first domino of companies to fall because of this bet. Microstrategy’s stock lost 33% in the past five days alone.