Volatility is a feature
The MicroStrategy stock is down significantly over the last year. However, Saylor is seemingly unfazed by the drop. He has explained that the company is designed to act as a leveraged instrument for Bitcoin exposure. He argued that investors must adjust their time horizons to understand the asset class.
"The company's engineered to be amplified Bitcoin," Saylor explained. "So when Bitcoin goes up, we go up faster. When Bitcoin falls, our volatility is higher. We've created an asset that's got an 80 vol."
Regarding the underlying asset itself, Saylor has argued that the price swings as a necessary component of its performance.
"I think the key to keep in mind is that Bitcoin is digital capital. It's going to be two to four times as volatile as traditional capital like gold or equity or real estate," he said. "It's got two to four times the performance this decade of traditional capital. It's the most useful global capital asset in the world."
The liquidation myth
Pressed on what would happen if Bitcoin experienced a catastrophic, multi-year crash, Saylor maintained that the company has ample room to maneuver without selling its stack.
"If Bitcoin falls 90% for the next four years, we'll refinance the debt," Saylor stated. "Look, you're at 68,000 right now. Literally has to fall to 8,000. Then we just refinance the debt. If you think it's going to zero, then we'll deal with that. But I don't think it's going to zero. And I don't think it's going to 8,000 either. But the credit risk is de minimis at this point."
He further clarified the company's cash position relative to its obligations.
"We have two and a half years of dividend coverage and debt coverage in cash. We raised $4 billion this year so far. We raised 25 billion last year. There isn't credit risk to the company."
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