Adam Back, CEO of Blockstream, has publicly defended Michael Saylor's Bitcoin acquisition strategy at MicroStrategy (MSTR), asserting that the premium associated with MSTR stock is justifiable. Back highlighted that MicroStrategy's historical performance in reducing risk exposure for investors, particularly through its rapid doubling of Bitcoin per share, validates the current premium.
Backing Saylor's Bold Bitcoin Bet
Adam Back, a prominent figure in the Bitcoin community, recently voiced his support for MicroStrategy's aggressive Bitcoin accumulation strategy. Speaking at BTC Prague, Back explained that the premium on MSTR stock is not "unreasonable" given the company's track record.
Justifying the Premium
Back elaborated that MicroStrategy's ability to double its Bitcoin per share within 16 to 18 months, even with the stock trading at a 2x multiple, makes the premium understandable. He noted that this consistent growth effectively de-risks the investment over time, leading to an equivalent of 1 mNAV (market net asset value) where the investment has a "hard currency base."
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MicroStrategy's net asset value premium is approximately 1.7x based on basic shares and 1.9x on a diluted share basis.
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The company utilizes financial instruments like at-the-market equity offerings (ATM) and convertible senior notes to expand its Bitcoin holdings.
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As of the latest data, MicroStrategy holds 592,100 Bitcoin, valued at approximately $60.89 billion.
Navigating Premium and Risk
Back emphasized that when investing in Bitcoin treasury companies, assessing the reasonableness of the premium is crucial. He suggested considering how long it takes for the premium to be overcome by the company's performance.
While acknowledging that high mNAVs can be speculative, Back also pointed out that treasury companies with elevated mNAVs often exhibit a high yield. He cautioned that significant fluctuations in mNAV can be a "nervous experience" for investors.
Metaplanet's Volatility and Recovery
Back also touched upon Metaplanet, another Japanese investment firm with a Bitcoin treasury, noting its mNAV has experienced more volatility. Despite fluctuating between 10 and 5 mNAV, Metaplanet has consistently recovered.
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Metaplanet recently increased its Bitcoin holdings to 10,000 BTC with a purchase of 1,112 Bitcoin on June 16.
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This acquisition positions Metaplanet as the seventh-largest publicly traded company with a Bitcoin treasury, surpassing Coinbase.
Sources
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Michael Saylor’s Strategy premium is not ‘unreasonable’: Adam Back — TradingView News, TradingView.
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