A company that doesn't produce anything of value get infinite P/E ratio due to Bitcoin. Compared to companies like AAPL that consistently produce products and tools that changes the lives of millions of people with only P/E ratio of 3x (<-- this means 30 something, not 3x as in 3 times, what I really want to say is, 30 something times)something.
Here's how I view it, and I believe Saylor as well: cash loses double digit % purchasing power annually for the things you want to buy and hold.
You can hold on to your melting pile of cash, or you can deploy that capital elsewhere. Art, wine, stonks, negative/0 yielding bonds, real estate, crypto kitties, or an asset that has been appreciating at a clip of 200%/yr.
Question is not why btc, but why would you put yourself at a disadvantage by holding fiat reserves.
None of these are the real question as regards a publicly traded company in the business software space. The better questions are:
- Why is the Company holding so much cash? Most companies do not hold 60% of their market value in cash or other assets unrelated to their core lines of business. Why is MicroStrategy making this choice?
- Why will the Company not return the excess cash to shareholders instead of running an investment book on the side?
- Revenue is declining in a market that is experiencing growth. Why is management focused on the minutiae of treasury management instead of fixing the core business?
It's not fiat vs BTC, it's about why is the company holding so much cash in the first place?
It's even worse than that. This isn't cash MSTR has on hand; they're raising new cash by issuing convertible bonds.
As an investor, if I want to bet on BTC, I can just buy BTC. Why would I buy this weird hybrid of business intelligence software company and holding company?
It's essentially a public holding company for bitcoin now. So using P/E isn't a relevant metric, try P/B, or use P/E after subtracting the bitcoin value from market cap. Your valuation methodology is as broken as the world supposedly is.
A company that owns $100 of cash and does nothing, should be worth $100. It earns $0, but is still worth $100. Therefore, its P/E would be 100/0 = infinity.
MSTR is becoming sort of like that. It very well could still be overvalued, but people aren't buying it for its earnings, they are buying it for the assets it holds (bitcoin).
Can I create an infinite energy money machine by doing this: BTC is held by MSTR, MSTR is held by ABC, ABC is held by FGE, FGE is held by XYZ? Eventually all companies hold it, and SP500 will be BTCPrice * 500. Everyone is rich. It's just a matter of time before it goes to the whole market. Everyone is rich.
Nope can't do that. MSTR might trade at a premium to its BTC holdings but only because at the moment it allows people to buy BTC through more traditional investment accounts. Your hypothetical ABC wouldn't have any advantage over MSTR so it would trade at parity.
I'm really not trying to be pro or anti BTC/MSTR here, just explaining whats going on. It's valid to think it's stupid/overvalued, but I'm just pointing out that its P/E ratio isn't the reason. And comparing MSTR's P/E to Apple's doesn't really make sense at face value.
> MSTR might trade at a premium to its BTC holdings but only because at the moment it allows people to buy BTC through more traditional investment accounts
While I share the sentiment about microstrategy, I don't follow your point on Apple. It's trading at something like 29x earnings, a market cap of $2100 billion. It's not exactly cheap.
Has Apple changed lives for the better though? I’m not sure anymore. A perusal of the literature on mental health effects of technology (specifically phone) addiction would say no. There are too many studies to post as a reference and they all say the same thing.
In countries with totalitarian and/or corrupt governments, it did. Venezuela, Argentina, Russia, China, ...
Even the US is testing its people trust and confidence with its aggressive money printing. Doesn't feel like free markets when there is a buyer of a last resort with infinite money.
This world already broken beyond repair.