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MicroStrategy (MSTR) stock is up nearly 15% on Wednesday, helped by a modest rally in bitcoin (BTC) and news late Tuesday that Michael Saylor is stepping down as CEO to become executive chairman. The software company's president, Phong Le, will become CEO.
The management changes will allow for the company's enterprise business to have the full focus of the CEO, with Saylor devoting his energies to strategies for corporate bitcoin (BTC) adoption.
“In my next job, I intend to focus more on bitcoin,” Saylor tweeted early Wednesday in a tongue-and-cheek response to those who think the moves might mean he has become less bullish on the crypto.
Meanwhile, Le said investors shouldn’t expect any surprises in strategy. On the company’s earnings call late Tuesday, Le said he has been aligned with Saylor on the enterprise and bitcoin strategy throughout their time together. The changes, he said, will free up time for him to run the company. “I would sort of see this as a business-as-usual transition,” Le told analysts.
“We think this transition was underway for quite some time with Mr. Le's appointment as president two years ago,” Joe Vafi, an equity research analyst with Canaccord Genuity, told clients in a note Wednesday. “Overall, we don't expect any material change in the strategic direction of the company.”
Vafi rates MicroStrategy a buy, although he did trim his price target to $372 from $453 (current stock price is $317). MicroStrategy stock, said Vafi, is the “most streamlined play” for equity investors to gain bitcoin exposure in the public markets.
Of last quarter's $917.8 million impairment charge on bitcoin holdings during the second quarter, it's “essentially meaningless,” said BTIG analyst Mark Palmer, noting it has no impact on the company’s inherent value. “That value can be easily ascertained as it stems from just two sources,” said Palmer, “the market value of MSTR’s bitcoin holdings and the value of its enterprise analytics software unit.” Palmer reiterated his buy rating and $950 price target.
Still, the impairment could have had some impact on Saylor's role change, according to some crypto industry participants. “There was no doubt that there was going to be external pressure from stakeholders to see some sort of response from the company,” said Tanim Rasul, chief operating officer of crypto trading platform NDAX.
Rasul said Saylor was a key proponent in advocating for corporate bitcoin adoption, although impairment losses may have spooked other publicly traded companies, especially considering the uncertainties across the global economy and markets.
“Michael Saylor’s response was to push himself into an executive chairman role so that a new CEO could focus more on core operations for MicroStrategy,” Rasul said, contrasting Elon Musk and his company, Tesla (TSLA), which opted to sell a good chunk of its bitcoin holdings.
By Michael Bellusci