Michael Saylor’s Strategy makes up metrics to explain MSTR dilution

Strategy (formerly MicroStrategy) reported earnings this week with founder Michael Saylor focusing on financial abstraction across an hour-long webinar.

While he provided basic metrics about the company’s fourth-quarter performance, he focused mostly on renaming shareholder dilution with phrases like “BTC Gain.”

In a daisy chain of financial complexity, Strategy has managed to dilute shareholders by focusing on abstract financial models that focus on the quantity of bitcoin (BTC) per share rather than the reason for that quantity.

The more time investors spend doing calculations and forecasts, the less time they have left to ponder the source of the data itself.

Although it operates a declining enterprise software business that (worth less than $3 billion before the company’s August 2020 pivot to BTC) Strategy’s $85 billion market cap today almost entirely derives from its $46 billion worth of the world’s leading crypto.

That 84% premium of the company’s market cap above its BTC is real, and investors colloquially refer to it as an “asset premium” or “multiple-to-net asset value” (mNAV). At publication time, Strategy’s mNAV is 1.84X.

For a variety of reasons, including the ability of the highly volatile company to sell attractively priced corporate bonds with liquid hedges for short sales, Strategy has traded at a premium to its BTC holdings for several years.

Its mNAV was higher than 3.4X as recently as November 2024.

This premium that investors pay for Strategy shares above its BTC holdings funds almost everything else that occupies mindshare on Wall Street: accounting models, options pricing, corporate bond yields, share conversions, and key performance indicators (KPIs) like Saylor’s newly-introduced BTC Yield, BTC Gain, and BTC $ Gain.

All of these exotic terms have the basic mNAV to thank for their positive existence and performance.

The company also listed a new type of dividend-yielding convertible preferred share on the Nasdaq, STRK, further complicating calculations about how much BTC to which common Strategy investors have claim.

Focus on the BTC Gain and BTC $ Gain

BTC Gain and BTC $ Gain are simply calculations that derive from Strategy’s issuance of dilutive instruments that capture its mNAV. This derives from investors being willing to pay more for Strategy than the BTC it holds.

The first KPI that is an abstraction of this corporate capture is BTC Yield, which is the percentage change in BTC holdings to Strategy’s assumed diluted shares outstanding. In other words, BTC Yield is the amount of extra BTC per share that shareholders receive over time as a result of Strategy itself selling to capture some of the market’s mNAV.

The next layer of KPI abstraction is Strategy’s BTC Gain. Specifically, for the full year 2024, the company’s BTC Gain was 140,538. It calculates this as the number of BTC held at the beginning of a period multiplied by the BTC Yield for such period.

In other words, it is just a mathematical derivative of the above BTC Yield.

Similarly, the third KPI abraction, BTC $ Gain, is yet another mathematical derivative of the above BTC Yield.

BTC $ Gain is the dollar value of the BTC Gain multiplied by the market price of bitcoin.

Strategy has forecasted a 2025 full-year BTC $ Gain of $10 billion.

With the unveiling of a new name, STRK stock listing, and various KPI metrics that are mostly mathematically interrelated, Saylor is reiterating his multi-decade strength in complex financial abstraction.

Dashboards for investors tracking his stock now monitor dozens of figures to make sense of the multiple tiers of equity and valuation metrics that apply to an investment decision in MSTR.

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