| FW30 - 12/21/2024 13:58
I hear that MSTR will be bankrupt if bitcoin retreats to a year ago levels. Could that happen? -- yes it can...
This is the problem with investing with leverage, which MSTR has been doing on bitcoin for some time now. Great when it goes up, and total wipeout if it falls back too low...
Bitcoin went from 66k to 16k in 2022 and MSTR was fine despite nearly everyone saying they were going to get liquidated and that they are the most reckless company on earth.
Bitcoin can and vary well may retreat to levels it was at last year but that would not bankrupt MSTR unless those levels stayed there for years on end. All the convertible debt loans MSTR has made have been made to mature at least 4 year later. So as long as bitcoin is above the price it was 4 years ago they are ok from a bankruptcy standpoint and even then they could refinance or sell Bitcoin to pay some of it off.
From the last quarterly report MSTR had about 4.2 billion in debt and since than has added another roughly 3 billion( admittedly these are rough numbers since it between quarterly reports). Having approximately 7.5 billion in total debt. Having 7.5 billion in debt compared to 42 billion in assets and a total market cap of 88 billion. That gives them a debt to asset value of 17% and a debt to equity ratio of 8.5%.
A lot of farmers wish their debt was 8.5% of the total value of the business they owned. Especially considering the average American has about a 30% debt to asset value ratio.
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Global M2 and Bitcoin
