Stock Thread (16 Viewers)

[Peggy]

Reportings are 100% consumer sentiment.

TSLA numbers miss expectations, but the stock jumps up because Musk says they are going to make more affordable models, maybe by 2025. And it jumped 8% before he even said that.

META numbers beat expectations, but the stock slumps because they said they're revising 2nd quarter projections down. However, last quarter after a small head fake down META jumped 20% on Friday AFTER the other big guys reported. I wonder if there isn't a chance to make some quick money on them with insurance knowing you just bought a big dip if you have to hold on longer.

The reality is people like you and me don't factor into earnings at all. It's not like average joes read through the earnings report and found the part about the more affordable model in 48 seconds. That was a fund with a team of people sitting at the ready specifically looking to find that info as fast as possible.

This is the same thing with "beating" vs "missing" earnings and the stock sometimes behaving the opposite. Because the "estimates" are really pretty irrelevant. It doesn't matter what some random analyst says that Meta should have an EPS of $XX. If a fund with a billion dollars invested in Meta and another billion ready to deploy thinks that Meta should have an EPS of $YY or they're getting out of the trade, that's the number that actually matters.

If a report is a "miss" against "the street estimates" but a "hit" against what a fund with a crapton of money wants to see, then the fact that it was technically a "miss" doesn't actually matter.

Random analyst? I thought it was a "consensus". And I see a fund as a consumer.

Is this like a team scout(s) having a significantly different grade on a player than everyone else so they get drafted a lot higher than expected? I can see how that would cause a run on WRs and WRs value suddenly becomes higher or lower, temporarily.

 

[FreeBaGeL]

Reportings are 100% consumer sentiment.

TSLA numbers miss expectations, but the stock jumps up because Musk says they are going to make more affordable models, maybe by 2025. And it jumped 8% before he even said that.

META numbers beat expectations, but the stock slumps because they said they're revising 2nd quarter projections down. However, last quarter after a small head fake down META jumped 20% on Friday AFTER the other big guys reported. I wonder if there isn't a chance to make some quick money on them with insurance knowing you just bought a big dip if you have to hold on longer.

The reality is people like you and me don't factor into earnings at all. It's not like average joes read through the earnings report and found the part about the more affordable model in 48 seconds. That was a fund with a team of people sitting at the ready specifically looking to find that info as fast as possible.

This is the same thing with "beating" vs "missing" earnings and the stock sometimes behaving the opposite. Because the "estimates" are really pretty irrelevant. It doesn't matter what some random analyst says that Meta should have an EPS of $XX. If a fund with a billion dollars invested in Meta and another billion ready to deploy thinks that Meta should have an EPS of $YY or they're getting out of the trade, that's the number that actually matters.

If a report is a "miss" against "the street estimates" but a "hit" against what a fund with a crapton of money wants to see, then the fact that it was technically a "miss" doesn't actually matter.

Random analyst? I thought it was a "consensus". And I see a fund as a consumer.

Is this like a team scout(s) having a significantly different grade on a player than everyone else so they get drafted a lot higher than expected? I can see how that would cause a run on WRs and WRs value suddenly becomes higher or lower, temporarily.

Yes a projected "consensus" that may or may not align with the people/funds with the real money capable of moving the stock.

I kind of look at it like draft projections. ESPN might make projections based on "rumblings" or whatever, but when push comes to shove the people with the money (draft picks, in this case) to change that player's contract by choosing where to draft him might value the guy very differently.

 

[McBokonon]

I kind of like the idea that the economy is clicking but we have rate cuts in the holster if things get upended. Let it ride, my Fed dudes.

Per the Twitters (I’m only seeing the quote and
not an article, which makes me think they’re getting it from the Bloomberg Terminal or something) - Fed Swaps are no longer fully pricing in a rate cut before December. I think that’s why premarket looks bad but of course you never know. Magic 8 ball stuff.

 

[JB Breakfast Club]

Pain

 

[JB Breakfast Club]

Opened a position in META
Adding some CAT

 

[Capella]

Pain

Yea I think I’ll take the best two days off and think of my meta gains these past two years.

 

[hooter311]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

 

[Bossman]

META down 12% after hours on weaker guidance.

Folks….go long.

Add more tomorrow

I've "loaded the boat" today ... and will be holding long term.

 

[SFBayDuck]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

That would get me back to a small gain. I bought a few weeks ago at $1,523 on the pull back from the ATH, but it's just kept dropping.

 

[hooter311]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

That would get me back to a small gain. I bought a few weeks ago at $1,523 on the pull back from the ATH, but it's just kept dropping.

Be patient. $1523 is still a great price for a long term hold. Btc price discovery is just around the corner.

 

[Bossman]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

 

[ConstruxBoy]

Seeing a pattern again today that I feel like I've seen numerous times in the last year. Overall market pretty down but NVDA up quite a bit. Interesting.

 

[McBokonon]

SNAP reports tonight. Hold onto your Trade Desks.

ETA: I just turned green on the day.

 

[McBokonon]

Seeing a pattern again today that I feel like I've seen numerous times in the last year. Overall market pretty down but NVDA up quite a bit. Interesting.

What people are hammering META for (more investment in AI than expected!) is helping NVDA AND ANET (more investment in AI than expected!)

 

[Capella]

Yea I’m green in my account without Meta. Gb nvda.

 

[McBokonon]

We've got to be able to identify the beneficiaries of the AI boom. It won't only be NVDA. Maybe it's competition, maybe it's complementary services, maybe it's yet to be identified. Who will be the Oracle to Microsoft, the Dell to Hewlett-Packard, the Sun Microsystems to IBM?

Can Palantir be the software platform that companies rely on to leverage AI? They have a strong hold on government contracts and are moving to the commercial private sector. If they can do in private industry what they've done at the federal level, they will do very well...

I’ve been thinking about this a bit, too. Who else will benefit that hasn’t already gone parabolic? Thinking software companies like Adobe, SIs like Accenture, data center REITs, that kind of thing.

I hesitate to bring anything growthy up here anymore because how people trade and scale are different and so are risk appetites but...

They're up big recently and today but $CLS is still cheap. Using AI in logistics, growing fast.

$CLS taking off again today. Still only 14.5X Forward Earnings.

Bought some $CLS options. Great earnings, raised guidance, was up over 6% AH last night but has been dragged down to flat/lower with the market today. Still only 14.85 forward P/E.

 

[FreeBaGeL]

SNAP reports tonight. Hold onto your Trade Desks.

ETA: I just turned green on the day.

I think SNAP reporting after META limits the damage they can do this time.

 

[Bob Sacamano]

Yea I’m green in my account without Meta. Gb nvda.

Well la-dee-####ing-da

#NotGreen

 

[SFBayDuck]

SNAP reports tonight. Hold onto your Trade Desks.

ETA: I just turned green on the day.

Sold 2/3 of my SNAP position down about 1%, just didn't see the bump they typically get going into the post-earnings crash. Was going to sell all but figured I'd roll the dice and see what happens with a little bit!

 

[Schmeabs]

Green for MSFT and GOOGL after earnings

 

[McBokonon]

GOOGL!

Also a dividend

 

[McBokonon]

SNAP reports tonight. Hold onto your Trade Desks.

ETA: I just turned green on the day.

Sold 2/3 of my SNAP position down about 1%, just didn't see the bump they typically get going into the post-earnings crash. Was going to sell all but figured I'd roll the dice and see what happens with a little bit!

Whoa...up over 20%. Nice hit on what was left.

 

[Desert_Power]

SNAP reports tonight. Hold onto your Trade Desks.

ETA: I just turned green on the day.

Sold 2/3 of my SNAP position down about 1%, just didn't see the bump they typically get going into the post-earnings crash. Was going to sell all but figured I'd roll the dice and see what happens with a little bit!

Whoa...up over 20%. Nice hit on what was left.

This seems like a sign of the apocalypse or something.

 

[hooter311]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

 

[McBokonon]

SNAP reports tonight. Hold onto your Trade Desks.

ETA: I just turned green on the day.

Sold 2/3 of my SNAP position down about 1%, just didn't see the bump they typically get going into the post-earnings crash. Was going to sell all but figured I'd roll the dice and see what happens with a little bit!

Whoa...up over 20%. Nice hit on what was left.

This seems like a sign of the apocalypse or something.

And Trade Desk is up 5% after hours. This is like when George goes up to that woman and says he's 35, unemployed, and lives with his parents and she's totally down for it.

 

[SFBayDuck]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

Would love to see it! Most of the BTC I own was bought in the high teens and twenties, but I did add some more when we dipped down to around $60K, along with that position in MSTR and a GBTC->FBTC trade. All in it's climbed to about 2.5% of my portfolio, so still a small piece and right in the range of where I want it. Wouldn't mind to see a rebalancing triggered in the next 6-12 months!

 

[The General]

GOOGL!

Also a dividend

6 to midnight!

 

[Bob Sacamano]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

Educate the uneducated, if you would be so kind.

 

[Bob Sacamano]

GOOGL!

Also a dividend

Invest in things you hope to grow in your brokerage account
Invest in things you expect to pay dividends in your tax sheltered accounts
At the point all the items in the first bucket become items in the 2nd bucket, invest in

 

[Bob Sacamano]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

Educate the uneducated, if you would be so kind.

n/m. I went looking

 

[Bob Sacamano]

That has to be priced in, at least to some extent, though. No?

 

[hooter311]

That has to be priced in, at least to some extent, though. No?

From what I've put together the last few days, its kind of a double edged sword...

They can adapt the new ruling early at any point this year, but the tax implications might prevent them from doing so. That decision will be announced at earnings.

Now I think its gonna be in MSTRs best interest to attempt to show a profit this quarter as I believe they are trying to make a push to the SP500 which would really set off some fireworks.

So earnings will either be 50 cents a share or $500 a share which explains the volatility.

 

[hooter311]

An update on those covered $mstr calls I've been selling in an attempt to generate some income...

4/8 sold 4/12 $2200 call- $574.21 net
4/12 sold 4/19 $2100 call- $450.32 net
4/19 sold 5/3 $2000 call- $629.31 net

Over $1600 on the month, should have been doing this years ago...

 

[massraider]

META down 12% after hours on weaker guidance.

Their AI seems to be pretty impressive

 

[Bossman]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

 

[hooter311]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

MicroStrategy's Accounting Problem For Bitcoin Poses Profit Conundrum - Analyst Lays Out Answers - MicroStrategy (NASDAQ:MSTR)

Analyst reaffirms Buy for MSTR with $1875 target. Company's bitcoin strategy led to 10x stock increase, but ASC 350 caused impairment losses.

www.benzinga.com

Another article on it. The more I read the more I am also confused.

They do generate a few hundred million as a software company, but its the fact that they will always be the largest corporate holder of btc is what makes the stock so valuable to me.

 

[Bob Sacamano]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

The company is currently undervalued due to accounting rules. As I understand it...

Current State: You buy BTC at $70k. BTC value craters to $30k. You have to re-evaluate the carrying value of that crypto (annually, I believe), and if it is impaired, you recognize that loss as a reduction of pre-tax income (You just lost $40k * # of BTC you hold).

If that crypto then goes back up to $70k by the point your annual re-valuation takes place, it's obviously good for your company, but right now you can't recognize that increase in the value of your impaired BTC. They remain valued at $30k on your balance sheet.

Think about the volatility in crypto. For a company like MSTR, that means their balance sheet for the BTC they've held since '21-'22 reflects values significantly below current value.

Revised Rules: Effective in 2025, but apparently able to be implemented sooner, companies are allowed to switch to a Fair Value methodology. Companies like MSTR must revalue quarterly to recognize the Fair Value of their crypto. So those shares that have been on heir balance sheet at $30k will immediately snap back to $60k+ on their balance sheet going forward. They become a much more valuable company by accounting standards. And that increase in value will pass through to their bottom line as income.

It doesn't change the "real" value of the company. But lots of accounting requirements cause divergence between balance sheet value and liquidation value, and they can swing both ways.

 

[hooter311]

Loading up on $BKKT at .36 cents. They are doing a 25/1 reverse split on 4/29.

Its a crypto platform with 18%+ short interest and just took a kick in the sack on earnings. Another one I'm hoping for a short squeeze when we get that 20% leap in btc prices as I'm anticipating.

 

[Bob Sacamano]

I don't know that that helped.

 

[Bob Sacamano]

But that also doesn't mean analysts haven't baked that value into their analyses. It is known. As is the pending change in accounting methodology.

 

[Bob Sacamano]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

The company is currently undervalued due to accounting rules. As I understand it...

Current State: You buy BTC at $70k. BTC value craters to $30k. You have to re-evaluate the carrying value of that crypto (annually, I believe), and if it is impaired, you recognize that loss as a reduction of pre-tax income (You just lost $40k * # of BTC you hold).

If that crypto then goes back up to $70k by the point your annual re-valuation takes place, it's obviously good for your company, but right now you can't recognize that increase in the value of your impaired BTC. They remain valued at $30k on your balance sheet.

Think about the volatility in crypto. For a company like MSTR, that means their balance sheet for the BTC they've held since '21-'22 reflects values significantly below current value.

Revised Rules: Effective in 2025, but apparently able to be implemented sooner, companies are allowed to switch to a Fair Value methodology. Companies like MSTR must revalue quarterly to recognize the Fair Value of their crypto. So those shares that have been on heir balance sheet at $30k will immediately snap back to $60k+ on their balance sheet going forward. They become a much more valuable company by accounting standards. And that increase in value will pass through to their bottom line as income.

It doesn't change the "real" value of the company. But lots of accounting requirements cause divergence between balance sheet value and liquidation value, and they can swing both ways.

No wonder a bunch of accountants are canceling them.

 

[hooter311]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

The company is currently undervalued due to accounting rules. As I understand it...

Current State: You buy BTC at $70k. BTC value craters to $30k. You have to re-evaluate the carrying value of that crypto (annually, I believe), and if it is impaired, you recognize that loss as a reduction of pre-tax income (You just lost $40k * # of BTC you hold).

If that crypto then goes back up to $70k by the point your annual re-valuation takes place, it's obviously good for your company, but right now you can't recognize that increase in the value of your impaired BTC. They remain valued at $30k on your balance sheet.

Think about the volatility in crypto. For a company like MSTR, that means their balance sheet for the BTC they've held since '21-'22 reflects values significantly below current value.

Revised Rules: Effective in 2025, but apparently able to be implemented sooner, companies are allowed to switch to a Fair Value methodology. Companies like MSTR must revalue quarterly to recognize the Fair Value of their crypto. So those shares that have been on heir balance sheet at $30k will immediately snap back to $60k+ on their balance sheet going forward. They become a much more valuable company by accounting standards. And that increase in value will pass through to their bottom line as income.

It doesn't change the "real" value of the company. But lots of accounting requirements cause divergence between balance sheet value and liquidation value, and they can swing both ways.

I believe the company will bend over backwards for that sp 500 inclusion and they really need to show a profit to keep short term hopes of that alive. It is the reason Saylor has been selling his shares hoping for inclusion.

Also, they need to keep their share price high because they are using that as leverage to fund their bitcoin purchases. Which is why we won't see any type of split anytime soon

 

[stbugs]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

The company is currently undervalued due to accounting rules. As I understand it...

Current State: You buy BTC at $70k. BTC value craters to $30k. You have to re-evaluate the carrying value of that crypto (annually, I believe), and if it is impaired, you recognize that loss as a reduction of pre-tax income (You just lost $40k * # of BTC you hold).

If that crypto then goes back up to $70k by the point your annual re-valuation takes place, it's obviously good for your company, but right now you can't recognize that increase in the value of your impaired BTC. They remain valued at $30k on your balance sheet.

Think about the volatility in crypto. For a company like MSTR, that means their balance sheet for the BTC they've held since '21-'22 reflects values significantly below current value.

Revised Rules: Effective in 2025, but apparently able to be implemented sooner, companies are allowed to switch to a Fair Value methodology. Companies like MSTR must revalue quarterly to recognize the Fair Value of their crypto. So those shares that have been on heir balance sheet at $30k will immediately snap back to $60k+ on their balance sheet going forward. They become a much more valuable company by accounting standards. And that increase in value will pass through to their bottom line as income.

It doesn't change the "real" value of the company. But lots of accounting requirements cause divergence between balance sheet value and liquidation value, and they can swing both ways.

I think I’d disagree on the undervalued part. That’s been a short seller argument that if you buy MSTR as a BTC vehicle you are paying way more than the current spot price of BTC. The market cap is $22B and the BTC holdings are $14B. Not sure how much debt they have because they have been buying more BTC by selling debt but as you can see buying a share would get you around 60% of the share price in BTC. Buy BTC via ETF and you get 100% of the share price you pay.

I think the accounting rule change is only there to hope that they can get into the S&P index, hoping that drives up the price, which again would mean you are getting less BTC per share.

 

[stbugs]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

The company is currently undervalued due to accounting rules. As I understand it...

Current State: You buy BTC at $70k. BTC value craters to $30k. You have to re-evaluate the carrying value of that crypto (annually, I believe), and if it is impaired, you recognize that loss as a reduction of pre-tax income (You just lost $40k * # of BTC you hold).

If that crypto then goes back up to $70k by the point your annual re-valuation takes place, it's obviously good for your company, but right now you can't recognize that increase in the value of your impaired BTC. They remain valued at $30k on your balance sheet.

Think about the volatility in crypto. For a company like MSTR, that means their balance sheet for the BTC they've held since '21-'22 reflects values significantly below current value.

Revised Rules: Effective in 2025, but apparently able to be implemented sooner, companies are allowed to switch to a Fair Value methodology. Companies like MSTR must revalue quarterly to recognize the Fair Value of their crypto. So those shares that have been on heir balance sheet at $30k will immediately snap back to $60k+ on their balance sheet going forward. They become a much more valuable company by accounting standards. And that increase in value will pass through to their bottom line as income.

It doesn't change the "real" value of the company. But lots of accounting requirements cause divergence between balance sheet value and liquidation value, and they can swing both ways.

I believe the company will bend over backwards for that sp 500 inclusion and they really need to show a profit to keep short term hopes of that alive. It is the reason Saylor has been selling his shares hoping for inclusion.

Also, they need to keep their share price high because they are using that as leverage to fund their bitcoin purchases. Which is why we won't see any type of split anytime soon

Wait, he’s been selling all his shares so that the company can be in the S&P? How does that work?

 

[McBokonon]

They are doing a 25/1 reverse split on 4/29.

This is usually a reason to short a company. Reverse splits are basically like putting a company into hospice.

 

[Bob Sacamano]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

The company is currently undervalued due to accounting rules. As I understand it...

Current State: You buy BTC at $70k. BTC value craters to $30k. You have to re-evaluate the carrying value of that crypto (annually, I believe), and if it is impaired, you recognize that loss as a reduction of pre-tax income (You just lost $40k * # of BTC you hold).

If that crypto then goes back up to $70k by the point your annual re-valuation takes place, it's obviously good for your company, but right now you can't recognize that increase in the value of your impaired BTC. They remain valued at $30k on your balance sheet.

Think about the volatility in crypto. For a company like MSTR, that means their balance sheet for the BTC they've held since '21-'22 reflects values significantly below current value.

Revised Rules: Effective in 2025, but apparently able to be implemented sooner, companies are allowed to switch to a Fair Value methodology. Companies like MSTR must revalue quarterly to recognize the Fair Value of their crypto. So those shares that have been on heir balance sheet at $30k will immediately snap back to $60k+ on their balance sheet going forward. They become a much more valuable company by accounting standards. And that increase in value will pass through to their bottom line as income.

It doesn't change the "real" value of the company. But lots of accounting requirements cause divergence between balance sheet value and liquidation value, and they can swing both ways.

I think I’d disagree on the undervalued part. That’s been a short seller argument that if you buy MSTR as a BTC vehicle you are paying way more than the current spot price of BTC. The market cap is $22B and the BTC holdings are $14B. Not sure how much debt they have because they have been buying more BTC by selling debt but as you can see buying a share would get you around 60% of the share price in BTC. Buy BTC via ETF and you get 100% of the share price you pay.

I think the accounting rule change is only there to hope that they can get into the S&P index, hoping that drives up the price, which again would mean you are getting less BTC per share.

A change in accounting rules and nothing else is going to boost the value of the assets they hold on their balance sheet. The value of those assets is understated relative to market value.

However you want to parse the words or however differently you want to state it, their balance sheet is valued below (but not undervalued?) what it will be when the accounting rule change is implemented.

 

[Bob Sacamano]

I'm not suggesting any of that warrants any action RE: the stock. Just what the outcome will be when the new FASB rule takes effect.

 

[stbugs]

Mark my words, $MSTR gonna run up 30%+ next week.

Currently at $1,238.

What is happening next week that might drive up the price? ER??

Earnings, which I think they will 5x the estimates just based on the new accounting rules.

Also think we hit btc new all time highs by next friday with price discovery potentially getting wild.

This is the part that is confusing to me ...
so the company isn't doing anything to generate more revenue or profit, no new ideas or products, ... they are just changing how they report earnings so that it SHOWS more profit.
I don't see how this makes the company / stock more valuable but apparently it does.

The company is currently undervalued due to accounting rules. As I understand it...

Current State: You buy BTC at $70k. BTC value craters to $30k. You have to re-evaluate the carrying value of that crypto (annually, I believe), and if it is impaired, you recognize that loss as a reduction of pre-tax income (You just lost $40k * # of BTC you hold).

If that crypto then goes back up to $70k by the point your annual re-valuation takes place, it's obviously good for your company, but right now you can't recognize that increase in the value of your impaired BTC. They remain valued at $30k on your balance sheet.

Think about the volatility in crypto. For a company like MSTR, that means their balance sheet for the BTC they've held since '21-'22 reflects values significantly below current value.

Revised Rules: Effective in 2025, but apparently able to be implemented sooner, companies are allowed to switch to a Fair Value methodology. Companies like MSTR must revalue quarterly to recognize the Fair Value of their crypto. So those shares that have been on heir balance sheet at $30k will immediately snap back to $60k+ on their balance sheet going forward. They become a much more valuable company by accounting standards. And that increase in value will pass through to their bottom line as income.

It doesn't change the "real" value of the company. But lots of accounting requirements cause divergence between balance sheet value and liquidation value, and they can swing both ways.

I think I’d disagree on the undervalued part. That’s been a short seller argument that if you buy MSTR as a BTC vehicle you are paying way more than the current spot price of BTC. The market cap is $22B and the BTC holdings are $14B. Not sure how much debt they have because they have been buying more BTC by selling debt but as you can see buying a share would get you around 60% of the share price in BTC. Buy BTC via ETF and you get 100% of the share price you pay.

I think the accounting rule change is only there to hope that they can get into the S&P index, hoping that drives up the price, which again would mean you are getting less BTC per share.

A change in accounting rules and nothing else is going to boost the value of the assets they hold on their balance sheet. The value of those assets is understated relative to market value.

However you want to parse the words or however differently you want to state it, their balance sheet is valued below (but not undervalued?) what it will be when the accounting rule change is implemented.

I’m just saying undervalued in normal terms would not be correct. It’s a $22B company with no revenue growth and not significant operational earnings. The balance sheet and accounting method boils down to getting on the S&P index. People don’t care about the balance sheet. They care about the $14B in BTC, $22B market cap and possibly the company debt (to finance much of the BTC). The real balance sheet may improve but investors are already looking at their “BTC” balance sheet so to speak. That’s where if you liquidated the company for $22B, you’d only come back with $14B in BTC minus any debt payoff.

 

[stbugs]

I'm not suggesting any of that warrants any action RE: the stock. Just what the outcome will be when the new FASB rule takes effect.

Understood, that’s where I think it could be misread with “undervalued” as in the market cap being less than the cash on hand type situation.

 

[Desert_Power]

I’m far from a bitcoin bull but, if I were, I’d think there are more efficient ways of expressing that view than investing in a company/person with a history of fraudulent financial reporting