Billionaire Michael Saylor has been in tight spots before but nothing like this. The share price of Saylor’s firm, Strategy, which owns over 3% of the world’s Bitcoin, is down dramatically. Worse, the company faces twin headwinds in the form of a bearish crypto market and an impending rule change that will likely trigger a mass selloff of its stock. On Monday, the company announced a $1.2 billion reserve fund to meet impending interest and dividend obligations, but that did little to prop up its shares. All of this fueled fresh attacks from Saylor’s critics who say Strategy’s unusual business model, which revolves around selling stock to buy Bitcoin, is unsustainable or even a Ponzi scheme.
Saylor has ridden out storms in the past. That includes an accounting scandal in 2000 that almost sank one of his previous companies and saw him lose $6 billion of his personal fortune in a day. Saylor’s defenders, meanwhile, dismiss critics as knee-jerk Bitcoin detractors who don’t understand the currency or the corporate finance techniques underlying Strategy’s operations.
Saylor may escape from this bind, as he has in the past, but this time the stakes are higher. In recent years, Strategy’s purchases have helped fuel crypto’s record rise, and turned Saylor into Bitcoin’s leading evangelist. This means any move by Strategy to dump part of its holdings—something its CEO hinted last week could happen—would not only depress prices, but could spark a crisis of confidence and a broader selloff. Meanwhile, a further plunge in Strategy’s share price could not only threaten its future viability, but spur the collapse of dozens of other firms that have copied its business model. The coming months are likely to demonstrate once and for all whether Saylor is a pioneer in crypto finance, as his backers claim, or just another high-stakes gambler whose luck has run out.
