The most dazzling stock in the US! MicroStrategy has surged nearly 500% this year, becoming the fourth largest holder of Bitcoin in the world

According to Zhitong Finance APP, in June 1998, when MicroStrategy (MSTR.US) went public, the scrolling announcements in the trading hall were still reminding traders not to confuse the similarly coded MicroStrategy with Microsoft (MSFT.US).

Twenty-six years later, MicroStrategy and Microsoft are once again connected, but for entirely different reasons. MicroStrategy founder and chairman Michael Saylor stood before Microsoft shareholders, trying to persuade them that the company, which currently has a market capitalization of over $3 trillion, should invest a portion of its $78.4 billion in cash, equivalents, and short-term investments into Bitcoin. Michael Saylor stated, "Microsoft cannot miss the next wave of technology, and Bitcoin is that wave."

However, the vast majority of Microsoft shareholders do not agree with Michael Saylor's viewpoint, with less than 1% of Microsoft shareholders voting in favor.

In contrast, Michael Saylor has invested everything in this strategy. Since mid-2020, MicroStrategy has purchased 439,000 Bitcoins, which are currently valued at approximately $42 billion, forming the basis for the company's market capitalization to surge from about $1.1 billion in mid-2020 to its current $82 billion.

On Monday, MicroStrategy stated in a filing that over the past week or so, the company purchased 5,262 Bitcoins at a price of approximately $561 million, with an average price of $106,662 per Bitcoin. This brings the total number of Bitcoins held by the company to 444,262.

MicroStrategy's software division focused on business intelligence generates quarterly revenues of just over $100 million. After soaring in 1998 and 1999, the stock plummeted during the burst of the internet bubble, nearly losing all its value. Over the following decades, the stock slowly rebounded and then soared again with Bitcoin.

After four years of aggressively buying Bitcoin, MicroStrategy has become the fourth largest holder of Bitcoin in the world, following Bitcoin creator Satoshi Nakamoto, BlackRock's iShares Bitcoin Trust, and cryptocurrency exchange Binance. This has caused MicroStrategy's stock performance to often align with Bitcoin. Analysts believe that MicroStrategy's decision to purchase Bitcoin to protect the value of its reserve assets is a key factor in enhancing its stock appeal.

Data shows that as of last Friday's close of U.S. stocks, MicroStrategy has risen 477% year-to-date, a growth rate second only to AppLovin (APP.US) among U.S. tech companies with a market capitalization of $5 billion or more. In 2023, MicroStrategy has already risen 346%Although the rebound of MicroStrategy had already fully unfolded before November, the victory of Trump in the U.S. presidential election, supported by the cryptocurrency industry, further propelled the stock's rise. Since November 5, MicroStrategy's stock price has increased by 60%, eventually surpassing the high point since 2000 on November 11.

Michael Saylor seems to have become a gospel promoter for Bitcoin. However, recently, the criticism against him has been louder than ever. Critics label Michael Saylor as a "cult-like leader," claiming that his strategy resembles a "Ponzi scheme," where he buys Bitcoin through issuing bonds and stocks to support the rise of MicroStrategy's stock price, and then continues to do more of the same.

Presto Research analyst Min Jung stated that MicroStrategy's reliance on Bitcoin to meet its financial needs could pose risks. He said, "Currently, the favorable price trend of Bitcoin allows MicroStrategy to maintain a positive feedback loop—an increase in MicroStrategy's stock price can enhance financing, providing funds for further Bitcoin purchases, which in turn drives up the price of Bitcoin and the company's stock value. While this strategy is effective during a bull market, its sustainability largely depends on the continued appreciation of Bitcoin."

The well-known short-selling firm Citron Research pointed out at the end of November that MicroStrategy was "overheated." Citron Research analyst Andrew Left stated on social media platform X that MicroStrategy has almost transformed into a Bitcoin investment fund and has shorted the company. With the launch of Bitcoin ETFs, investors can directly invest in Bitcoin funds without having to use MicroStrategy's stock as an alternative option.

Citron Research noted that under Michael Saylor's leadership, MicroStrategy has made large-scale purchases of Bitcoin, even financing through bond issuance. Michael Saylor has leveraged capital market financing to fuel the frenzy for Bitcoin, which has also driven MicroStrategy's stock price to soar this year. However, Citron Research believes this resembles a corporate financing version of an infinite money glitch in video games—profitable, addictive, and potentially unsustainable.

In response to the criticism, Michael Saylor stated, "It's like developers in Manhattan; every time Manhattan's real estate prices go up, they issue more bonds to develop more real estate. That's why the buildings in New York are so tall. It's been going on for 350 years. I would call it economics."

It is worth mentioning that shortly after the U.S. presidential election, Michael Saylor stated in an interview, "As the 'red wave' sweeps the market, Bitcoin is riding high, and other digital assets will also begin to soar." He indicated that Bitcoin remains a "safe trade" in the cryptocurrency space, but as a broader "digital asset framework" is established in the cryptocurrency market, the entire digital asset industry will experience a surgeHe added: "Taxes will decrease. All discussions about unrealized capital gains tax and wealth tax are off the table. The hostility of regulators towards banks engaging with Bitcoin has also disappeared."

MicroStrategy has also become more aggressive in purchasing Bitcoin. So far this year, MicroStrategy has purchased over 255,000 Bitcoins, with about two-thirds acquired after November 11.

A week before the U.S. presidential election, MicroStrategy announced a plan called "21/21" in its quarterly earnings report, aiming to raise $42 billion over the next three years—$21 billion through equity and $21 billion through debt—to purchase more Bitcoin. For Michael Saylor, owning more Bitcoin is never too much. He predicted in September that by 2045, each Bitcoin could be worth $13 million, equivalent to an annual growth of 29%.

Michael Saylor believes that Bitcoin is the foundation of a new digital economy that will only grow larger, and "every day is a good day to buy Bitcoin, even buying at the peak is an optimistic investment." Although Microsoft has not followed Michael Saylor's advice, he still suggests that companies imitate his strategy. He stated that there are many "zombie companies" whose core businesses have not developed at all, and thus could better utilize cash