Michael Saylor's Bitcoin-Backed Fixed Income Strategy

Michael Saylor is Creating a New Market

Michael Saylor, founder of Strategy, is positioned as the architect of a Bitcoin-backed fixed income market. Benchmark analyst Mark Palmer noted that this strategy provides the company with permanent and non-dilutive capital through Bitcoin-linked perpetual preferred shares.

Benchmark reiterated its "buy" recommendation for Strategy (MSTR) shares, updating its target price to $705. Palmer made this assessment considering the long-term structural advantages. However, it was observed that Strategy shares fell by 2% during early trading, declining to approximately $324.

Investors Believe

Benchmark reported that during its investor meeting this week, Michael Saylor explained how these financial instruments strengthen the company’s strategy. Despite other firms racing to copy Strategy's game plan, the firm's 640,031 BTC treasury is twelve times larger than the current largest institutional ownership, allowing them to remain unrivaled in the industry.

Palmer emphasized that the real advantage of the company lies in the structure of its perpetual preferred shares. This structure eliminates the refinancing risk associated with Bitcoin's price fluctuations, providing the company with a stable capital base without diluting its average shares. Saylor frames this strategy as establishing Bitcoin as the foundation for a new fixed income market. This situation is likened to how mortgage-backed securities transformed real estate.

Investors have confidence in this strategy; the STRC offering raised $2.52 billion in July, marking the largest U.S. IPO of the year. Benchmark predicts that Bitcoin-linked fixed income products will become a multi-hundred-billion-dollar market, highlighting Strategy as the architect of this market.

The broker's price target reflects a 10 times multiple of anticipated increases in Bitcoin's value and expected earnings from the company's software business by the year 2026.