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Michael Saylor: Digital credit is Strategy the product,MSTR and equity is merely a byproduct
According to BlockBeats,October 20，Strategy founder Michael Saylor said in an interview: “What we are doing is creating a highly valuable product—digital credit. If this credit product works, we can sell billions USD of credit. When we sell 1000000000 USD of digital credit, we only need Bitcoin to outperform our hurdle rate, which is approximately 10.5%. So, if we sell 1000000000 USD of credit and Bitcoin appreciates by 10%per year, the company effectively earns 1000000000 USD in net profit, and we never need to repay that money.
Imagine that we sell 10000000000 USD of credit each year and Bitcoin appreciates by 10.5%per year. That would be like a company capable of generating 10000000000 USD in net profit. Now imagine that this figure can also grow by 20%or 30%each year. What is this company worth? Perhaps 10 times or 20 times that net-profit figure? That is the premium to net asset value (NAV).
Therefore,MSTR’s future depends on converting capital and Bitcoin into credit—digital credit—and thereby creating digital equity. If the credit product is good, the equity will outperform Bitcoin. Thus, credit is the product, and equity is merely a byproduct.
For us, repurchasing credit is a better use of capital, because if the credit works, the company’s stock should trade at a premium to net asset value (NAV). If we let the credit disappear, we are merely a holding company, and our share price can only fluctuate around net asset value. That is why we must defend this credit product.”
Original link https://m.theblockbeats.info/flash/372760