Michael Saylor says he would be willing to advise Trump on crypto matters

Key Takeaways

Michael Saylor is willing to advise Donald Trump on crypto matters upon request.
MicroStrategy continues to focus on Bitcoin holdings as a key means of generating value.

MicroStrategy co-founder and executive chairman Michael Saylor said Wednesday that he would be willing to provide advisory support to President-elect Donald Trump on crypto issues if asked.

“I am always open to comment on constructive digital asset policy in private or in public. And if I'm asked to serve on some sort of Digital Assets Advisory Council. Maybe I would,” said Saylor, talking about it Bloomberg open interest.

While Saylor confirmed meeting with many people in the incoming Trump administration, he declined to provide further details.

The announcement comes as MicroStrategy prepares to join the Nasdaq-100 along with Palantir Technologies and Axon Enterprise, replacing Super Micro Computer, Moderna, and Illumina, effective December 23.

However, the company's Bitcoin holdings could jeopardize its index position. MicroStrategy recently acquired an additional $1.5 billion in Bitcoin, bringing its total holdings to 439,000 BTC, worth approximately $45 billion.

The large Bitcoin stash could lead to the reclassification of MicroStrategy as a financial company in a March review by the Industrial Classification Board (ICB). This reclassification would likely remove the company from the Nasdaq-100, as the index includes only non-financial companies.

Addressing concerns about MicroStrategy's reclassification, Saylor said the company is not entirely responsible for its Bitcoin investments. The software division generates significant operating income, which he estimates at about $75 million a year.

“We have a very healthy software division now and we're very proud of it,” Saylor said. He noted that he had no plans to retire MicroStrategy. “It's profitable and it's a key part of the company's identity.”

“We also think of ourselves primarily as a Bitcoin Treasury company now. So our primary means of generating shareholder value is through our Treasury operations,” said Saylor.

“There are three ways to create shareholder value; there is operating income and our software business generates approximately $75 million a year in operating income. There is also investment income which has been difficult to find. But right now we have $18.6 billion of unreal investment income,” he said.

Saylor noted that MicroStrategy is “engaging” in strategic acquisitions similar to practices seen in other tech companies such as Apple.

MicroStrategy to reassess capital strategy after Bitcoin target of $42 billion

MicroStrategy has received approximately $17 billion worth of Bitcoin since announcing its 21/21 plan to finance its future Bitcoin purchases. With this pace of accumulation, the company could reach its $42 billion Bitcoin acquisition target by January 2025.

When asked about possible changes to the plan, Saylor indicated that MicroStrategy would reevaluate its capital allocation strategy once the $42 billion target is met.

“When we get through the 21/21 plan, which has $42 billion in capital, we will revisit our capital plan and implement a new plan based on the market conditions at the time,” he said.

Saylor said the company plans to pursue more capital raising through fixed income markets in the coming quarter to increase leverage, which would increase returns for its common shareholders.

While fixed income is their main focus, they will also consider other options such as preferred stocks, convertible bonds, or equity-linked funds, depending on market conditions, according to Saylor.

Will the S&P 500 be next?

As a result of MicroStrategy's large Bitcoin investment it was included in the Nasdaq-100, but it seems unlikely that it entered the S&P 500 due to the failure of the index's profit requirements. The company has been profitable in just one of the past four quarters, a key benchmark for S&P 500 inclusion, Bloomberg ETF analyst James Seyffart said. divided in a statement.

Despite this, upcoming changes by the Financial Accounting Standards Board could improve MicroStrategy's financial statements, according to the analysis.

Speaking about MicroStrategy's inclusion in the S&P 500, Saylor noted that the decision-making process and specific criteria are beyond his knowledge. However, he expressed optimism about future prospects.

“I'm optimistic that in 2025, when we adopt fair value accounting, we'll end up with $50 billion of assets on our balance sheet, under the fair value of Bitcoin going up 20% a year, you looking at $10 billion a year. investment income,” Saylor said.

“I expect we'll be generating billions of dollars a year or tens of billions of dollars a year in investment income, which will be GAAP profit,” he said. “I think that's the last thing people are looking for in terms of inclusion in the S&P.”