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Investors Are Piling Into This Hot New SPAC Stock Taking on MicroStrategy. Should You Follow Their Lead?
The Motley Fool· 2025-05-03 14:45
Core Viewpoint - The article discusses the transformation of Strategy (formerly MicroStrategy) into a Bitcoin treasury, highlighting the emergence of a new company, Twenty One, which aims to focus exclusively on accumulating Bitcoin for shareholders [1][2][4]. Group 1: Company Transformation - Strategy has shifted from being an enterprise software provider to primarily accumulating Bitcoin, with CEO Michael Saylor likening the stock to a leveraged Bitcoin ETF [1]. - The stock has gained popularity as Bitcoin's value has increased significantly over the past five years [2]. Group 2: Emergence of Twenty One - Twenty One, a new Bitcoin treasury backed by Tether, Bitfinex, and SoftBank, plans to go public via SPAC and aims to eliminate unrelated business activities to focus solely on Bitcoin accumulation [4][5]. - Following the announcement of its merger with Cantor Equity Partners, shares of Cantor tripled in value, reflecting investor excitement [5]. Group 3: Financial Projections - The merger gives Cantor a market value of approximately $400 million, with a $100 million cash pile for a 2.7% stake in Twenty One post-merger [6]. - Twenty One aims to establish a treasury of 42,000 Bitcoins, building on $3 billion worth of Bitcoin supplied by its backers [6]. Group 4: Valuation Insights - Investors are valuing Twenty One's planned Bitcoin holdings at nearly four times their actual value, with 2.7% of 42,000 Bitcoins worth about $108 million [7][8]. - The strategy of increasing Bitcoin per share is expected to provide a yield for investors, which is currently impractical for most Bitcoin holders [9]. Group 5: Comparison with Strategy - Strategy's stock trades at about twice the value of its Bitcoin treasury, allowing it to sell shares and reinvest in Bitcoin, thereby increasing stock value [10]. - The company's board has authorized a significant increase in share count, raising concerns about the risks associated with leveraged exposure to Bitcoin [11]. Group 6: Investor Expectations - Investors in Twenty One are anticipating even greater increases in Bitcoin per share compared to those in Strategy, as articulated by CEO Jack Mallers [12]. - While potential returns are high if Bitcoin appreciates, the volatility of Bitcoin poses significant risks, making the premium above net asset value a questionable investment [13].
Better Buy: Bitcoin vs. Strategy (MicroStrategy)
The Motley Fool· 2025-04-30 08:08
In four of the past five years, Bitcoin (BTC -0.41%) has been the top-performing asset in the world, and it hasn't even been close. In 2020, 2023, and 2024, Bitcoin delivered triple-digit returns to investors. Over the past five years, Bitcoin is now up a head-spinning 956%.It might seem unfathomable, then, that any stock could possibly surpass Bitcoin's performance over that time interval. So you might be surprised that Strategy (MSTR 3.21%) -- the company formerly known as MicroStrategy -- has done exactl ...