A shakeup of MicroStrategy Inc.’s executive suite has crypto traders weighing the consequences for bitcoin as Michael Saylor drops his role as chief executive officer.
MicroStrategy’s
MSTR,
shares jumped almost 13% Wednesday, a day after the company said Michael Saylor would give up the CEO title and take on a new role as executive chairman.
The company’s president Phong Le will take on the CEO position starting Aug. 8. The transition was announced as MicroStrategy reported a net loss of $1.06 billion in the second quarter, including $917.8 million in digital asset impairment losses, as bitcoin price crashed.
Phong will manage overall corporate operations while Saylor will “focus more on” the company’s bitcoin acquisition strategy and related bitcoin advocacy initiatives, according to MicroStrategy.
As one of the most vocal bitcoin
BTCUSD,
bulls, Saylor pushed forward MicroStrategy’s move to buy the cryptocurrency in bulk first in the summer of 2020 and later doubled down. The company has raised a total of $2.4 billion in debt to purchase the digital asset. As of June 30, it held about 129,699 bitcoins. The decision comes with a cost — since the first time it purchased bitcoins, MicroStrategy has recorded impairment losses of more than $1.98 billion on such assets.
Some critics attributed MicroStrategy’s executive transition to such losses, and speculated that the company would soon dispose of its crypto holdings, but Chris Kline, co-founder and chief operating officer at Bitcoin IRA, said he thinks the move is bullish for digital assets.
MicroStrategy is “doubling down here,” Kline said in an interview. “They’re letting the new CEO take care of the business operations. And Saylor is pivoting himself towards a hyper focus role, bitcoin acquisitions and strategy within the software enterprise,” Kline said.
Representatives at MicroStrategy didn’t immediately respond to requests asking if the company plans to sell any of its bitcoin holdings.
Mark Palmer, analyst at BTIG, said in a note Wednesday that he believes that Saylor’s change in position will have no meaningful impact on MicroStrategy’s overall strategy or how it is executed. “Saylor’s primary focus since MSTR launched its bitcoin acquisition strategy in August 2020 has been on the execution of that strategy,” Palmer wrote.
Meanwhile, the company’s impairment charges on bitcoin are “essentially meaningless because it has no impact on the company’s inherent value,” according to Palmer. “That value can be easily ascertained as it stems from just two sources: the market value of MSTR’s bitcoin holdings and the value of its enterprise analytics software unit,” Palmer wrote.
Saylor has been a “very positive force for bitcoin” for buying and promoting the virtual currency, according to Charlie Morris, chief investment officer at ByteTree Asset Management. “But I can’t see them making an impact on the price of crypto in the long run.” according to Morris. “Markets aren’t really anything like in 2022 as they were last year.”
What’s more, “a lot of people buy MicroStrategy [shares] because it’s hard to buy [bitcoin spot] ETFs,” according to Morris. “So the biggest threat to MicroStrategy would be an SEC approved spot bitcoin ETF.”
