Blake on Nostr: On valuing leveraged BTC equities (LBEs) Q1 financial reporting for companies such as ...
On valuing leveraged BTC equities (LBEs)
Q1 financial reporting for companies such as Strategy and Semler Scientific will record marked-to-market gains on BTC holdings as income.
Strategy has ~$46b in BTC - a 10% gain in BTC’s price would mean ~4.6b in income.
Strategy is also accumulating bitcoin aggressively. So far this quarter, they’ve grown their BTC stack by 4.1% on a fully diluted basis, equaling roughly $1.8b at today’s BTC price of $97k.
For valuation purposes, the gains from Strategy’s BTC stack, the rate of adding to their BTC, and assumptions on the price of BTC are paramount. Let’s go over each quickly.
If BTC appreciated to $107k by the end of the qrtr, a 10% gain from current prices, and still below ATH’s, MSTR could report ~$4.6 in income from the appreciation. With an S&P average forward earnings multiple of ~24, MSTR would be valued around~$441.6b. It’s currently at $84.4b
On top of the BTC hodling gains, let’s say, hypothetically, that MSTR manages to grow its BTC by 5% in Q1 2025. That’s roughly 23,158 BTC. Using the assumption of $107/BTC, that’s ~$2.4b.
Using S&P average forward earnings multiple of 24 again, MSTR would be worth ~$230b based on their accumulation strategy alone.
When added together, the suggested market cap of MSTR would be approximately $671b, given the previous assumptions and a P/E ratio of 24.
And that’s throwing in the enterprise software business in for free.
The price per share, at current outstanding share count, would then approximately be $2,655.
Compared to its current price of 334/share, I’d say the company is significantly undervalue.
I like the stock.
NFA.
P.S. if MSTR records $7b of income for Q1 2025 and its market cap is roughly the same, they will have a P/E ratio under 5. For context, other NASDAQ 100 companies routinely have P/E ratios above 30.
Q1 financial reporting for companies such as Strategy and Semler Scientific will record marked-to-market gains on BTC holdings as income.
Strategy has ~$46b in BTC - a 10% gain in BTC’s price would mean ~4.6b in income.
Strategy is also accumulating bitcoin aggressively. So far this quarter, they’ve grown their BTC stack by 4.1% on a fully diluted basis, equaling roughly $1.8b at today’s BTC price of $97k.
For valuation purposes, the gains from Strategy’s BTC stack, the rate of adding to their BTC, and assumptions on the price of BTC are paramount. Let’s go over each quickly.
If BTC appreciated to $107k by the end of the qrtr, a 10% gain from current prices, and still below ATH’s, MSTR could report ~$4.6 in income from the appreciation. With an S&P average forward earnings multiple of ~24, MSTR would be valued around~$441.6b. It’s currently at $84.4b
On top of the BTC hodling gains, let’s say, hypothetically, that MSTR manages to grow its BTC by 5% in Q1 2025. That’s roughly 23,158 BTC. Using the assumption of $107/BTC, that’s ~$2.4b.
Using S&P average forward earnings multiple of 24 again, MSTR would be worth ~$230b based on their accumulation strategy alone.
When added together, the suggested market cap of MSTR would be approximately $671b, given the previous assumptions and a P/E ratio of 24.
And that’s throwing in the enterprise software business in for free.
The price per share, at current outstanding share count, would then approximately be $2,655.
Compared to its current price of 334/share, I’d say the company is significantly undervalue.
I like the stock.
NFA.
P.S. if MSTR records $7b of income for Q1 2025 and its market cap is roughly the same, they will have a P/E ratio under 5. For context, other NASDAQ 100 companies routinely have P/E ratios above 30.