MSTR will be bankrupt should BTC fall down to $5.5k. Target $3.

2021年7月4日

MSTR shareholder equity other than BTC is about 400mm.
They own 3.7B worth of BTC as of today which would be worth 580mm at 5.5k per BTC.
Total equity at 5.5k per BTC: 1B.
Total debt they raised to buy BTC: 2.2B.

Once BTC crashes down to 5.5k their equity will be -1.2B, should they sell "intelligence" part of the business for 11B equity still would be negative.

On a side note we have a perfect abc correction upward with a bearish divergence which implies crash down to about $3 per MSTR stock.

2022年5月12日

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Look up my newest update.

2022年11月27日

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Update: please find my most recent take below.

2022年11月28日

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The dominant narrative out there is that MSTR cannot be liquidated as they hold long-term debt with very low interest rates and Saylor is a genius, bla bla bla.

Truth is, MSTR can be liquidated and heres how (based on this study: blockworksresearch.com/resea...):
- MSTR has 67m cash on hand which is about a year of expenses;
- Their business used to generate between ~20m to ~60m free cash per year, now interest payments cost around ~40M per annum hence eating up all most all profit from the core business;

- They hold about 130k BTC of which 30k BTC is used as a collateral for 2025 secured loan with Silvergate (205m of debt) and around 15k BTC is used as a collateral for 2028 Senior Secured Notes (489m of debt) leaving the company with 85k BTC;
- With BTC at 13.6k they would have to top up Silvergate loan collateral which they might or might not do (most likely yes); With BTC at 3.5k both 2025 and 2028 debt collateral faces liquidation;

- Hence at 3.5k per BTC they have 85k BTC worth ~297m; 30k BTC worth ~106m used as a collateral securing 205m loan and 15k BTC used as a collateral securing 489m in secured notes;
- At that point they face two options (1) get liquidated; or (2) top up the collateral.
- In case of (2) they will face the same problem at around 1K per BTC with no outstanding Bitcoin left so most likely they will pick the liquidation option;

- Let's focus on ~205m debt. At 3.5k per BTC, 30k BTC will face liquidation, there will be no liquidity at that point and it's unlikely that they will sell the bag at 3.5k (most likely well below 3k). But for simplicity sake let's assume they liquidated the whole bag at 3.5k, that leaves them with about ~105m in proceedings;
- At this point 205m-105m=100m is left to be repaid EFFECTIVE IMMEDIATELY! (not in few years time!)

- Where do they get the cash from? MSTR business is losing money (or at least not generating cash anymore); they have only 67m cash on hand and their Bitcoin is worth about ~250m or less;

- Now they face two options (1) sell the remaining Bitcoin (but there is no liquidity!) to pay off the Silvergate loan (with no way to pay other debt in the future) or (2) Chapter 11 in which case the liquidator will be obligated to sell all assets including Bitcoin.

- MSTR has crosshair on their head and there is no option not to be liquidated should BTC fall down to 3k.