MicroStrategy rides 'red sweep' to 477% gain in 2024, major tech stocks

In the evening MicroStrategyand stock market discussion in June 1998, founder Michael Saylor stayed in a penthouse suite at New York's Lotte Palace in Midtown Manhattan. Saylor, who was 33 at the time, says it was the most luxurious hotel room he had ever seen, paid for by lead underwriter Merrill Lynch.

The next morning, Saylor went to the floor of the Nasdaq to watch his company's stock open. He recalled seeing a note hovering over the ticker, warning traders: “Please do not confuse MSTR with MSFT.” The latter belonged to Microsoftthe software giant that had gone public 12 years earlier.

MicroStrategy shares rose 76% in their debut, joining the parade of tech companies benefiting from the dot-com boom.

“It was a good day,” Saylor told CNBC.

More than 26 years later, MicroStrategy and Microsoft were once again connected, but for a completely different reason. In December 2024, Saylor stood before Microsoft shareholders to try to convince them that the company, now valued at more than $3 trillion, should put some of its $78.4 billion in cash, equivalent to a short-term investment. bitcoin.

“Microsoft cannot afford to miss the next wave of technology, and that wave is bitcoin,” Saylor said in a video presentation that he published on X Last week. The post has over 3.6 million views.

Saylor has joined that strategy. MicroStrategy has bought 439,000 bitcoins since mid-2020, a stock that is now worth about $42 billion and is the basis for the explosion of the company's market cap to $82 billion from about $1.1 billion when the plan was apply.

MicroStrategy's software unit, which specializes in business intelligence, generates just over $100 million in revenue each quarter. After rallying in 1998 and 1999, the stock plummeted in the dot-com boom, losing almost all of its value. In the decades that followed, it slowly bounced back from before rocking up Bitcoin because.

Four years into its bitcoin buying spree, MicroStrategy is the world fourth largest wrestlerbehind the creator only Satoshi Nakamoto, BlackRock owns iShares Bitcoin Trust and crypto exchange Binance.

At Microsoft, the shareholder vote supported by Saylor failed by a wide margin – less than 1% of his investors voted for him.

But the sight allowed Saylor, now 59, to preach the gospel of bitcoin and discover the benefits of turning as much money as possible into that one digital asset. . It's a story that Wall Street has been talking about.

Shares of MicroStrategy are up 477% this year as of Friday's close, second only AppLovin among U.S. tech companies valued at $5 billion or more, according to FactSet data. That's after a 346% gain in 2023.

While the rally was in full force well before November this year, Donald Trump electoral victory, funded heavily with the crypto industry, has moved the stock even more. The shares have risen 60% since the November 5 election, and finally surpassed their dot-com high since 2000 on November 11.

Saylor has long spoken about bitcoin in an evangelical way and is co-authoring a book about it in 2022 titled “What is money?” But his critics have become louder than ever recently, referring to Saylor as a cult-like leader and his strategy as a “ponzi loop” that means taking out debt and equity to buy bitcoin, watching MicroStrategy's stock price go up, and then doing more of the same.

“Wash, rinse, repeat – what could go wrong? ” wrote Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, in November 12. post on X to his 1 million followers.

Saylor, who has 3.8 million followers, addressed the growing chorus of skeptics last week in an interview with CNBC's “Money movers.”

“Just like developers in Manhattan, every time Manhattan real estate goes up in value, they take out more debt to develop more real estate, that's why your real estate so high in New York City,” said Saylor, in a clip posted to .X by his legion of fans. “It's been going for 350 years. I would call it economy.”

Saylor is a frequent guest on CNBC, appearing on various programs throughout the year. He also agreed to two interviews with CNBC.com, one in September and another shortly after the election.

The first of those conversations came back at the Lotte, just a few elevator stops from the lighthouse where he stayed the night before his stock hit the Nasdaq. Saylor was delivering a keynote speech at the hotel and taking meetings on the side.

He wore a designer suit and an orange Hermes tie, matching the color of bitcoin. The election was less than two months away, and crypto companies were pumping money into the Trump campaign after the Republican candidate and vice president, who previously announced bitcoin. “scam against the dollar,” they started promising a much more crypto-friendly administration.

Two months earlier, in July, Trump delivered a keynote speech at the biggest bitcoin conference of the year in Nashville, Tennessee, where he promised to fire the SEC Chairman Gary Genslerindustry critic, and said that the US would become the “crypto capital of the planet” if he won​​​​​​.

“I think the election year has inspired the crypto community to find its voice, and I think it has inspired a lot of enthusiasm that was hidden,” Saylor said in an interview in Sept. “When Trump came out uncertain, that was a big boost for the industry. When it came out completely positive, it was another boost.”

Until this year, MicroStrategy was one of the few ways in which many institutions could buy bitcoin. Because MicroStrategy was equity, investment firms did not need any special provision to own it. The environment changed in January, when the SEC approved spot on bitcoin exchange-traded fund, which allows investors to buy an ETF that tracks the value of bitcoin.

Since Trump won, it's all been up and to the right. Bitcoin is up about 41% and the BlackRock ETF is up 39%. Gensler is preparing to leave the SEC, and Trump has chosen a deregulation candidate and former SEC Commissioner Paul Atkins replace it.

Venture capitalist David Sacks, an outspoken conservative who hosted a fundraiser for Trump in San Francisco, will be Trump's “White House AI & Crypto Czar.” name earlier this month in a post on his Truth Social platform.

“With the red sweep, bitcoin is going up with tailwinds, and the rest of the digital assets will start to go up,” Saylor told CNBC in a phone interview shortly after the election. He said that bitcoin remains a “safe trade” in the crypto space, but as a “digital asset framework” is put in place for the broader crypto market, “there will be an upswing in the entire digital asset industry,” he said. e.

“Taxes are coming down. All the rhetoric about undeveloped capital gains taxes and wealth taxes is off the table,” Saylor said. “All the hostility from the regulators to the banks touching bitcoin” is also going away, he said. .

MicroStrategy has become even more aggressive with its bitcoin purchases. Saylor said in a mail on December 16th, that his company had acquired 15,350 bitcoins for $1.5 billion over a six-day streak starting on December 9th.

So far this year, MicroStrategy has acquired 249,850 bitcoins, with nearly two-thirds of those purchases occurring since November 11.

“We were going to do it regardless,” Saylor said, referring to the election results. “But what was a head wind has become a tail wind.”

A week before the election, MicroStrategy announced its season employment distribution plan to raise $42 billion over three years. That included stock sales of up to $21 billion through financial firms including TD Securities and Barclays, opening up much more liquidity for bitcoin purchases.

Saylor told CNBC that it was “probably the single most important earnings call in the company's history.” “

Too much ownership isn't too much for Saylor, who predicted in September that bitcoin could hit $13 million by 2045, which would equate to 29% annual growth.

“We will continue to buy the roof forever,” he said in the same TV interview where he compared bitcoin to New York buildings. “Every day is a good day to buy bitcoin. We look at it as cyber-Manhattan.”

Saylor clearly talks about bitcoin as the foundation of a new digital economy that will only get bigger. But even since the start of his bitcoin strategy in 2020, there have been pockets of significant pain for investors – the stock lost 74% of its value in 2022 before rising above in the last two years.

However, he advises companies to imitate his strategy. Microsoft didn't listen, but Saylor said there are plenty of “zombie companies,” with core businesses going nowhere that could use their money better.

“Traditional advice is, you do a transformational acquisition, you find you need a merger partner. You're dead in the water. Go find someone to merge with, ” said Saylor at the Lotte in September. “Bitcoin is the universal unifying partner, right? The real appeal of digital capital is that you can fix any company.”

Correction: This article has been updated to correct a reference to the number of years since Microsoft's release.