MSTR Stockholder Concerns and Strategy

All right. Let's turn now to the equity side,

to the common stock MSTR.

We have a question from Rob. He said, "I have three

children and I invested 73,000 each into MSTR,

believing in the long-term potential.

Today, that 73,000 is worth 20,000 and the long-term

potential is now a function of getting back to breakeven.

MSTR common shareholders seem to be your lowest priority.

You defend STRC and pay down converts using MSTR at the

market offerings. Achieving BTC per share yield doesn't do

much for my

kids. I have a decade-long perspective, but I'm worried that

you will ATM so much that we'll never get back to 325 a share.

Have you considered paying out a dividend to MSTR common shareholders simply

to do something right by them in the near term?"

I can start on that and, and Mike can add.

And, and Rob, thanks for being a shareholder a- and, uh,

investing some money f- uh, into MSTR for your children.

Uh, of course, the common, uh, shareholders in

MSTR is our most important priority in creating value

and increasing the price of MSTR is our number one

priority. Uh, how do we do that? We do that by

outperforming Bitcoin. And, uh, since the beginning of

our strategy of putting Bitcoin on our balance sheet, that was August of

2020, Bitcoin's been up 32%, MSTR has been

up 41%. So we've outperformed Bitcoin over time,

and I

understand that you came in later and haven't seen that outperformance.

Um, what happens over time, right, uh, when Bitcoin's up,

uh, we tend to go up more because we have more

Bitcoin per share,

and we do that via, uh, historically leverage, and we've done

that more

recently via amplification. Uh, what that does mean,

and, and what you've experienced is when Bitcoin goes down, we tend to go down

more. So, uh, Bitcoin's seen a drawdown of 50% from

all-time highs. MSTR has seen a drawdown roughly of 75% of

all-time highs. Um, because Bitcoin's our

underlying, uh, asset, uh, increasing

Bitcoin per share increases the value of MSTR when Bitcoin

goes up, and we'll see sharper drawdowns.

Um, so how do we increase Bitcoin per share?

We increase Bitcoin per share historically through leverage, through

convertible bonds, and more recently through what Mike talked

about,

which is digital credit and amplification through Stretch.

And so ultimately, if we want the common to go up, we have

to increase Bitcoin per share, and increase Bitcoin per share means

making Stretch work, which is why it may seem like we're talking

primarily about Stretch right now, getting Stretch back to par,

but that's what

gets Bitcoin per share to go up and MSTR the common to go up

over time. Uh, we're not gonna pay a dividend.

Uh, that's not really the best deployment of

capital.

The best deployment of capital for us is to get Stretch to work

to buy Bitcoin and put it on our balance sheet, and that's ultimately the, the, the

objective of, of the company. And so over time, if

you believe in the underlying asset Bitcoin, and Bitcoin starts to

rise for all the characteristics, uh, Mike had mentioned

before, then MSTR will start to rise over time a-

and that's ultimately the goal of the company.

Michael, do you wanna weigh in at all on that?

Yeah. What I'd say is, uh, is if you want a dividend, you

should, uh, you should buy one of the preferred

stocks, like

STRD pays, uh, like almost, like

15% effective yield. So if you're looking for a stable instrument

that pays a dividend, then I would look to STRC

or STRK. Uh, they were designed to pay

dividends and give some upside. Um,

if, uh,

you know, if your time horizon is less than four months,

you probably should own a

money market. If you don't need-- If you want-- are making an investment

and want

the money back or wanna see a good return on your investment in four months to four

years, you're probably a credit investor

and you ought to look at,

uh, you ought to consider one of the credit

instruments.

If you're holding the equity, then you need a time horizon minimal

of four years, right? Ideal seven to 10

years. Uh, Bitcoin was at an all-time high about a year

ago. So

when we're in a bear market, you're gonna get more, uh,

amplified Bitcoin. So you're gonna-- uh, if Bitcoin's down 50%, we're gonna be

down 75%. And in a bull market, we expect to

outperform Bitcoin. So,

you know, when you're buying MSTR, you're getting

amplified Bitcoin. When you're buying Bitcoin,

you're getting on a rollercoaster.

So if you are gonna get on a rollercoaster, then probably you

wanna use, uh, a metric that's like a four-year

blended metric. So when we look at Bitcoin,

we look at the 200-week

simple moving average,

and, uh, that way we take a four-year cycle view

and we

consider how is it trading versus the four-year average.

I think that, uh, that MSTR is going to be more

volatile than that. So, so I think, uh,

the whole point of the equity is to generate the

amplification. And so if we were to pay the dividend, we

would be actually undermining the equity value

proposition and we'd be undermining, uh, the,

uh, credit value proposition. And the reason that the

equity is so volatile is because we sell the credit.

And the reason that we're working hard to build the balance sheet

is because the company's future is based upon the

credit. If, if we can sell $10 billion a

year worth of STRC and if

BTC outperforms our hurdle rate, it's about 10%,

10.5% right now,

then- The $10 billion of credit that we

sold starts to look like net income to the common stock equity

holders. So that being the case, you'll get a multiple on the

credit sales. If there are no credit sales, then there

isn't anything to multiply. And so the single

most important thing is for us to stabilize the credit

business and to build the, the most sustainable, highest

quality, uh, credit business that we can.

And so the equity will, uh, will actually come later,

right? We're in investment mode to build the

credit.

If we do the things that are good for the equity in the near term,

they're bad

for the equity over the long term. And on the other hand,

if we do the things that

are, that are good for the credit in the near

term, that will be good for

the equity. So ultimately, the product of the

company is the credit,

and the better the credit is, the more valuable the company is.

And we think the company will be very, very valuable if we

make the credit, especially STRC,

successful. So we're, we're making a long-term

investment.

It's not unlike Netflix or Amazon.

When Amazon was building out Amazon Prime, they were providing cheap

shipping and, or free shipping for a long period of

time, and people thought it

was not great for the equity. But at the point where everybody in the

country is subscribed to the product, and they all use the product, then

Amazon won the market. And our view is the same.

We want to win the digital credit market, and we-- And ultimately, we

want to create the world's best credit.

And if we do that, then the primary beneficiaries will be the

equity holders, of which I'm a big one.

I have more than 19 million shares of the equity.

So I feel your pain, uh, but, uh, I

think we have to be prepared to have difficult years.

It might be one year, it might be two years.

We, we wouldn't think it would be four years,

but we might have to

actually ride through some number of months or a year or two in order to get to

the point where things start to work to the benefit of the

equity.