Dispute Arises Over Valuation Methods at BTC Prague Event
During the BTC Prague conference, a debate emerged between Michael Saylor, Executive Chairman of Strategy, and Jack Mallers, CEO of Strike and Twenty One Capital, about the appropriate metrics for assessing the company's valuation. The discussion primarily focused on Saylor's interpretation of multiple-to-net asset value (mNAV) and the implications of equity issuance on shareholder value.
Key Points from the Discussion:
- Saylor emphasized that investors can evaluate mNAV by considering common equity, preferred equity, and convertible debt, while also validating the use of gross and net assets per share.
- In response to concerns about dilution, Saylor argued that issuing equity for cash or bitcoin does not necessarily reduce shareholder value, as investors gain substantial assets in return.
- Mallers challenged Saylor's stance, questioning the inclusion of out-of-the-money securities in mNAV evaluations.
During their exchange, Mallers pointed out that Strategy currently holds $6.7 billion in convertible debt that is not likely to convert into equity at the present share price of $115. He pressed Saylor for examples of transactions he would classify as dilutive if equity issuance for cash is not included in that category.
Saylor clarified that mNAV can be calculated by factoring in the notional values of various securities, but reiterated that it is just one of several valuation approaches. He noted that the distinction between different asset types becomes less critical when debt and preferred equity represent a small fraction of the overall asset base.
