Strategy Inc. Executive Chairman Michael Saylor has floated a $1 trillion valuation for the company and says its digital credit business is key to his expectations for the stock.
Saylor describes digital credit as Strategy’s main product and says the company uses Bitcoin (BTC) capital in its credit model. He expects the results of that business to shape the performance of Strategy’s common shares. If it succeeds, he believes the stock could outperform Bitcoin and trade at a premium.
The $1 trillion figure is a possibility Saylor raised, rather than a reported valuation. His outlook for the shares depends on the credit business succeeding.
Saylor uses three categories to describe the assets involved. He calls Strategy’s variable-rate perpetual preferred stock, STRC, digital credit; its common shares, digital equity; and direct ownership of Bitcoin, digital capital.
The credit model has also figured in his argument about how Strategy should be viewed by index providers. In an earlier interview about MSCI’s eligibility rules, Saylor compared the company’s use of Bitcoin in credit products with the activities of banks and insurers.
Saylor’s Oct. 19 update on STRC’s credit measures put modeled dollar assets at enough to cover 3.4 years of interest and preferred dividends, compared with 3.5 years a week earlier. He put STRC’s BTC Credit at 53 basis points, up from 52. The model used an $81,468 Bitcoin reference price and assumed a 10% annual return and 40% volatility.
MSCI plans to publish a final list of companies potentially affected by its new eligibility rules Nov. 11. The rules are set to take effect at the close of Nov. 30.
