MSTR's Leveraged Bitcoin Bet Delivers 42% Annualized Return Since August 2020

Strategy Executive Chairman Michael Saylor's company, MSTR, has reportedly delivered a 42% annualized return since it pivoted to a bitcoin-based treasury strategy on August 10, 2020. This figure outperforms Bitcoin, the Magnificent Seven group of large-cap technology stocks, and the S&P 500 index over the same period.

The company's stock price has been volatile in recent years, with MSTR falling sharply from its highs even as it continues to accumulate bitcoin. To explain this divergence, Strategy has introduced new metrics, including Net $BTC Per Share, which represents the value of the company's bitcoin holdings minus debt and preferred-stock obligations.

Strategy's underlying bitcoin position is currently worth an estimated $11.4 billion less than its original purchase price of $63.69 billion. However, due to the nature of MSTR's leveraged proxy for bitcoin, the stock can post outsized annualized gains even while the company's raw bitcoin position is temporarily underwater in dollar terms.

Saylor has argued that converting a mid-cap software company into a leveraged bitcoin holding vehicle has outperformed nearly every other asset class available to public market investors. The company continues to add to its bitcoin holdings, with a recent move to add $525 million to its dollar reserve aimed at shoring up dividend coverage on preferred shares.