Saylor Defends MicroStrategy: Investors Must Brace for Tough Years

Strategy Inc. Executive Chairman Michael Saylor and CEO Phong Le recently defended the company's bitcoin-centric capital strategy, arguing that recent pain and equity issuance are necessary.

Is Strategy Diluting MSTR Shareholders?

During Strategy's second investor Q&A session with Natalie Brunell, Le responded to shareholder concerns after bitcoin fell roughly 50% from its highs and MSTR suffered a decline of about 75%.

Le explained that Strategy's common stock shareholders remain its top priority, but emphasized that MSTR is designed to provide amplified bitcoin exposure. This means it can outperform bitcoin during rallies but will experience steeper losses during downturns.

Saylor acknowledged the frustration, noting that he personally owns more than 19 million shares of MSTR stock.

"I understand your pain," Saylor added. "But I think we have to be prepared to endure difficult years. It could be one year, or it could be two years."

He added that MSTR investors should ideally have a seven-to-ten-year investment horizon, citing that the company remains in investment mode while building out its digital credit business.

"I think there's a misconception that issuing our equity dilutes shareholders," Le was quoted as saying.

He argued that issuing MSTR stock at a premium of 1x above its net asset value to acquire bitcoin could actually be accretive on a per-share bitcoin basis.

Therefore, Strategy's focus is not merely on the number of outstanding shares, but on whether each financing transaction increases the amount of bitcoin attributable per share.

Saylor believes that prioritizing short-term support for MSTR could undermine its long-term value proposition.

Why Strategy Is Focused on Digital Credit

Saylor revealed that Strategy's core goal is no longer simply accumulating as much bitcoin as possible at any given price.

Instead, it aims to build what he calls the world's "best credit," particularly through STRC, while using the proceeds to acquire bitcoin, maintain dollar reserves, or manage its capital structure.

Saylor estimates the digital credit market is currently around $15 billion, but he believes it could eventually expand to $100 billion, $400 billion, and ultimately $1 trillion.

Strategy is essentially betting that bitcoin's long-term appreciation will exceed its cost of capital. Saylor currently sets its crossover rate at approximately 10.5%.

"We're not really traders," Saylor said, explaining that Strategy's investment case depends more on bitcoin outperforming that crossover rate over decades than on timing the bitcoin bottom in the short term.