Michael Saylor’s Collapsing Strategy

[00:00] Well, well, well. Michael Sailor is back

[00:02] at it again. This time, potentially

[00:05] selling up to $1.25

[00:08] billion

[00:10] of Bitcoin in a new 8K just out. We've

[00:14] also got a revision to the stretch STRC

[00:18] policy. Boy, we've got a lot to talk

[00:21] about here. Let's first look at some

[00:23] price action. So obviously uh Bitcoin

[00:26] has come off of its uh last year highs

[00:29] pretty dramatically from that 126 had a

[00:32] lot of struggle bust to try to come back

[00:35] up here. We just really have not been

[00:37] able to recover. Uh and Micro Strategy

[00:41] the stock itself has essentially

[00:43] followed a similar pattern. Keep in mind

[00:45] the company has been issuing more shares

[00:47] of Micro Strategy to raise money. In

[00:50] fact, they just raised another billion

[00:52] dollars by issuing shares. You could see

[00:55] this right here. Look at this. During

[00:57] the period of June 22nd to June 28th,

[01:00] which is really just about a week, they

[01:02] raised another $1.1 billion by selling

[01:06] over 12.6 million of MSTR class A common

[01:12] stock. Mind you, on their Bitcoin right

[01:14] now, they're at over a $13 billion loss.

[01:17] So, we're clearly upside down on Bitcoin

[01:20] holdings over at Microsoft. But look at

[01:22] this. You can see here just over this

[01:24] last week, you get this sort of

[01:26] accelerated volume. See these higher

[01:28] volume candlesticks right here. A lot of

[01:30] this was actually just Michael Sailor

[01:32] hitting the sell button on Micro

[01:34] Strategy stock. Now, it's been very

[01:37] common for Michael Sailor to say, "Hey,

[01:39] I can raise an infinite amount of money

[01:42] uh by just issuing stock at Micro

[01:45] Strategy. I could always just issue

[01:47] stock and I don't have to worry about

[01:49] selling my Bitcoin because I could

[01:51] always just issue stock. So as a result

[01:55] we created all these different preferred

[01:58] options like stretch you know STRC the

[02:02] uh uh preferred perpetual preferred here

[02:05] where we'll just pay these cash

[02:07] dividends as long as you invest at this

[02:10] company that should be trading around

[02:12] $100 per share and you'll earn 10% on

[02:16] your money even though the company does

[02:18] nothing and it'll be funded by basically

[02:21] Bitcoin going up which is great when

[02:23] Bitcoin goes up and as usual terrible

[02:26] when Bitcoin goes down. And since

[02:28] Bitcoin has gone down, Strategy or STRC

[02:31] has now lost its $100 ideal trading

[02:36] level.

[02:37] And now Micro Strategy, Michael Sailor,

[02:42] starting to realize, wow, it's actually

[02:44] not that easy to raise money selling

[02:47] Micro Strategy stock because as soon as

[02:50] we go to sell a billion dollars worth of

[02:52] stock, we tank the stock price. In fact,

[02:56] literally on the 20 uh let's go to the

[02:59] day before on the uh yeah, okay, we'll

[03:01] go to the 18th over here. That's the

[03:02] trading day before. On the trading day

[03:04] before they started selling these 12

[03:07] million Micro Strategy shares, they

[03:10] closed at about $114

[03:12] per share. As they completed their

[03:15] offering uh on the 28th, which would

[03:19] basically be the open price here, they

[03:20] were down at $90. So basically to go

[03:23] raise $1 billion,

[03:26] they ended up having to decay their

[03:29] stock price by

[03:32] 21%.

[03:34] Think about that for a moment. They

[03:36] raised a billion at a $31 billion market

[03:41] cap company. At that point, it was about

[03:42] a $35 billion company. So they raised

[03:45] about $2.8%

[03:47] of the value of the company. They took

[03:49] 2.8% of the value of the company and

[03:50] turned it into cash.

[03:52] In doing so, they destroyed

[03:56] 21%

[03:57] of the value of the company. That means

[04:00] for every dollar that they raise in the

[04:03] stock market, they are burning about

[04:06] $7.5

[04:08] of corporate value. Think about that.

[04:11] I'm going to go raise a dollar. And in

[04:14] doing so, by raising a dollar, I am

[04:16] lighting an extra 6 and a half on fire.

[04:21] That sounds And that's exactly

[04:24] why Michael Sailor realizing that it's

[04:27] not that easy when your stock is

[04:30] plummeting uh to go to the market and

[04:32] say, "Hey, we want to sell more of the

[04:34] stock." Once he realizes, "Wow, it's not

[04:36] that easy to actually sell stock that's

[04:40] plummeting. You know, who wants to buy

[04:41] it?" What does he now announce? Uh, hey

[04:45] guys, we're actually going to have to

[04:47] sell Bitcoin. Here's the 10K from Micro

[04:51] Strategy. And they say right here, the

[04:54] company's board of directors has

[04:55] authorized a Bitcoin monetization

[04:58] program. Yes, we are now going to turn

[05:00] Bitcoin into fiat

[05:03] in which the company may sell Bitcoin

[05:05] from time to time for three purposes. We

[05:08] want to generate up to $1.25 billion of

[05:11] extra money so we can fund our USD

[05:13] reserve. Why do we need our USD reserve?

[05:17] Well, of course, to pay preferred stock

[05:19] dividends because the freaking preferred

[05:21] stocks are collapsing and we owe the

[05:23] dividends nonetheless. But of course,

[05:26] because there's so much pressure now

[05:27] because of these dividends and we

[05:29] promised we were going to pay so many

[05:31] dividends through the STRC perspectus,

[05:34] which I made a really big video on uh

[05:37] back in November. It was about 6 months

[05:39] ago. Uh and I said you should run away

[05:42] from this, that this was likely a Ponzi

[05:45] scheme. Uh in fact in our alpha reports

[05:48] which we release every single morning

[05:50] and uh every single morning the market

[05:52] is open almost every single morning the

[05:53] market is open unless I'm like on

[05:55] vacation or something like that. Uh and

[05:56] even then I still send send them out. At

[05:58] the very bottom I actually include a

[06:00] section where I call STRC a likely

[06:03] Ponzi. I am bearish Micro Strategy by

[06:06] default, but if I'm a 6 out of 10

[06:08] bearish on Micro Strategy, I'm a 20 out

[06:10] of 10 bearish on STRC. And I think that

[06:13] STRC will fail disastrously.

[06:17] So why did I think that back then? Well,

[06:20] I'll break it down to you. It's not just

[06:21] the fact that Michael Sailor now has to

[06:23] sell Bitcoin, which lowers Bitcoin

[06:25] prices in order to raise cash to pay the

[06:27] dividends, which were supposed to enable

[06:29] him to buy more Bitcoin through his

[06:32] preferred funds. It's not just that

[06:34] problem, but it is also the problem that

[06:37] Michael Sailor is now rugpulling the

[06:42] very dividend that he advertised. Take a

[06:44] look at this STRC dividend policy. The

[06:48] company announced a revised dividend

[06:50] policy for its variable rates series A

[06:53] per perpetual stretch preferred stock

[06:56] STRC stretch. Going forward, the company

[06:59] intends to evaluate the stretch dividend

[07:01] on a monthly basis based on basically

[07:04] how much it's sucking. So in other

[07:06] words, we won't necessarily pay a 10%

[07:10] dividend anymore. We might pay a lower

[07:13] amount or a different amount is the

[07:15] argument here. Now, why would they do

[07:18] that? So that they have to sell less

[07:20] Bitcoin. That's it. The whole goal is,

[07:23] hey, maybe maybe if we pay a lower

[07:25] dividend, we won't have to sell as many

[07:26] Bitcoin.

[07:28] Now, why is there a problem with STRC?

[07:30] Why did I say 6 months ago that this is

[07:32] a scam? Well, first of all, 6 months

[07:35] ago, they literally said right here, and

[07:38] nobody paid attention to it, except, you

[07:40] know, we talked about it, but most

[07:41] people didn't pay attention to it. This

[07:43] overall strategy also contemplates that

[07:46] we may periodically sell Bitcoin. They

[07:49] literally, like the attorneys were good

[07:51] at this. They told you they might end up

[07:53] having to sell Bitcoin.

[07:55] Like, that was obvious.

[07:57] But another thing that's pretty wild is

[08:00] when you look at the liquidation

[08:01] preference for this company, they argue

[08:03] that, oh well, you know, the liquidation

[08:05] preference for this company is $100 per

[08:07] share. So, you know, if we liquidate

[08:09] you, we'll pay you $100 per share. But

[08:11] that guarantee only works as well as

[08:16] they actually have money to pay the

[08:18] guarantee. It's not a guarantee, right?

[08:20] But they're basically saying, "Look, if

[08:21] we liquidate you, we'll pay you $100 a

[08:23] share." But I said that this is a scam

[08:26] because it's subject to their solveny I

[08:28] wrote. Okay. So what's their solveny?

[08:31] Well, it all comes down to the debt. And

[08:35] here I wrote down a quick little summary

[08:37] of where the debt is. STRC is junior to

[08:42] all liabilities of MSTR and STRF.

[08:46] So basically, every single dollar of

[08:49] debt that Micro Strategy itself has has

[08:54] to get paid first before STRC gets a

[08:58] dime. But the problem with that is Micro

[09:01] Strategy has way more debt than STRC has

[09:05] ever raised as a fund. That is scary

[09:10] because it basically means the

[09:11] liquidation preference means nothing.

[09:14] And so it's no surprise that now the

[09:16] stock is falling and people are like,

[09:17] wait, how is this possible? The

[09:19] liquidation preference, it's at $100.

[09:21] And again, I'm like, it doesn't matter

[09:24] because you have to compare it to the

[09:26] debt that Micro Strategy has. Look, STRF

[09:31] uh has about a billion.1 in debts and

[09:35] then you've got another about 8.24

[09:37] billion in aggregate indebtedness over

[09:39] at uh Micro Strategy. So when you add

[09:43] that together, you've got to get through

[09:45] almost $10 billion in actual debt before

[09:49] STRC has any money available to it. STRC

[09:54] right now has a market cap of about $4

[09:56] billion, which is remarkable that it's

[09:58] that high. But the point is there's

[10:00] almost there almost $2 worth of debt for

[10:03] every dollar of money that's sitting in

[10:05] STRC.

[10:06] And it's not even for STRC's purposes.

[10:10] It's just to bail out Micro Strategy.

[10:12] And Micro Strategy

[10:14] is actually up 8% today because of the

[10:18] idea that wow, maybe they'll have to pay

[10:20] fewer dividends. That's great. More cash

[10:22] for Micro Strategy. But let's not kid

[10:24] ourselves just because there's some

[10:26] enthusiasm intraday. Look at the overall

[10:28] trend for this puppy. The trend for this

[10:31] is driven by the fact that the

[10:34] underlying momentum thesis that Bitcoin

[10:37] will go up forever has broken. Now, does

[10:40] that make Bitcoin bad? No. I'm not here

[10:42] to dump on Bitcoin. I'm here to dump on

[10:45] Michael Sailor because I called this a

[10:47] scam in my opinion. You know, no

[10:48] guarantees, but I thought it was a scam

[10:50] day one. And I still think it's a scam.

[10:52] And so, it's not a surprise to me that

[10:54] now sell Bitcoin is turning into, well,

[10:57] when we sell Micro Strategy stock, we're

[11:00] actually losing $7.5 for every dollar we

[11:04] raise. This is stupid. Let's just go

[11:06] sell Bitcoin instead. Because when we go

[11:09] announce that we're going to sell a

[11:10] billion dollars of Bitcoin, Bitcoin goes

[11:12] down like 500 bucks or 1,000 bucks.

[11:15] Like, who cares? That's the idea is that

[11:19] they could actually cause less damage by

[11:22] selling Bitcoin. Now, hopefully for the

[11:25] Bitcoin fans, this is just part of the

[11:28] four-year cycle. Hopefully, this is just

[11:31] a down period where Michael Sailor says,

[11:34] "Hey, look, we're going to sell some

[11:36] Bitcoin just to kind of keep the company

[11:38] alive, to keep the preferreds going."

[11:41] Uh, we are, you know, after all, trying

[11:44] to quote unquote preserve long-term

[11:45] Bitcoin exposure. Uh, so we are going to

[11:49] preserve not selling our Bitcoin by

[11:52] selling our Bitcoin.

[11:55] Um

[11:57] maybe, but obviously they've signed

[11:59] themselves up for a whole lot of

[12:00] obligations. And I think if anybody

[12:03] needs to pray to the Pope or to wherever

[12:06] you pray, it's Michael Sailor. And he

[12:08] could always use the coupon code pope by

[12:11] going to meet Kevin.com, joining the

[12:13] courses on building your wealth, where

[12:15] you would have known 6 months ago that

[12:17] STRC, in my opinion, is a giant scam.

[12:21] Why not advertise these things that you

[12:23] told us here? I feel like nobody else

[12:24] knows about this.

[12:25] >> We'll we'll try a little advertising and

[12:27] see how it goes.

[12:27] >> Congratulations, man. You have done so

[12:29] much. People love you. People look up to

[12:31] you.

[12:31] >> Kevin Pra there, financial analyst and

[12:33] YouTuber. Meet Kevin. Always great to

[12:35] get your take.