Michael Saylor, the co-founder of cloud software company MicroStrategy, is stepping down as CEO to take on a new role of executive chairman so he can focus more on Bitcoin after the company reported a $1 billion+ loss related to the falling price of the No. 1 crypto in the second quarter.
“I will remain an executive officer of the company and chairman of the Board of Directors, as well as assuming the chair of investments committee and leading our Bitcoin acquisition strategy,” Saylor said on the company’s 2022 Q2 earnings call Tuesday. “My focus is Bitcoin advocacy and education, like with the Bitcoin Mining Council, and being spokesperson and envoy to global bitcoin community.”
MicroStrategy owns more Bitcoin than any other public company. Saylor stepped up a Bitcoin-buying spree in the summer of 2020 as a hedge against inflation, he said. The company’s shares increased by more than 170 percent as the price of Bitcoin rose.
The largest independent publicly-traded business intelligence company, MicroStrategy was dealing in Bitcoin, business software and data analytics. Saylor insisted he was committed to buying more Bitcoin and he urged audiences to do the same when he spoke publicly.
Saylor borrowed billions of dollars to buy Bitcoin and turn the company into a Bitcoin company, leveraged with debt and a $1 billion stock offering.
Bitcoin reached a record price of more than $68,000 in November 2021, before crashing to less than $20,000 at one point in June 2022 and again in July. Bitcoin was trading at $23,342.72 as of this writing.
MicroStrategy stock is down 40-to-50 percent this year, in line with Bitcoin’s price drop.
Even after Bitcoin had lost 40 percent of its value in January 2022, Saylor said he was not giving up on his multibillion-dollar bet for MicroStrategy. “Never. No. We’re not sellers. We’re only acquiring and holding bitcoin. That’s our strategy,” he told Bloomberg.
In May 2022, Saylor said that his MicroStrategy Bitcoin portfolio margin call is $21,000.
As of June 30, the company’s 129,699 Bitcoins were worth $1.988 billion after a cumulative impairment loss of $1.989 billion — an amount that exceeds the value of the Bitcoin on the company’s balance sheet, Bloomberg reported.
The company said it bought the coins at an average price of $30,664 each.
Heading into the covid-19 pandemic, Saylor was worried about how central banks were printing money and whether that could lead to inflation. Buying Bitcoin was an alternative to stock buybacks and acquisitions as inflation eroded the value of the company’s cash, Saylor said. “I had seen the demise of 99% of my competitors, and I could see where we were headed if we stuck with the status quo. We would have to either adopt a Bitcoin strategy or sell the company. And we elected to pursue Bitcoin.”
Saylor in the past has asked investors to sell all their earthly possessions and buy Bitcoin.
“Take all your money and buy Bitcoin,” he said during a debate with Frank Guistra, CEO of the Fiore Group, a private firm managing a broad portfolio of private equity investments and companies.
“Then take all your time to figure out how to borrow more money and buy more Bitcoin. Then take your time to figure out what you can sell to buy more Bitcoin.” Investors should mortgage their houses and businesses to buy Bitcoin, Saylor said in the YouTube video with Guistra, posted May 19, 2021.
Phong Le, the company’s president, will become CEO of MicroStrategy effective Aug. 8, 2022.
“We’re very aligned in how to run an enterprise software company and very aligned in Bitcoin acquisition strategy,” Le said. “I don’t have any significant changes planned.”
“Now Michael can focus on what he does best, promoting Bitcoin,” said Henry Elder, head of decentralized finance at Wave Financial. And the company can focus on making more money to buy more Bitcoin. They are basically doubling down.”