Technology · August 3, 2022

MicroStrategy CEO Saylor transitions to the role of Chairman

MicroStrategy’s Michael Saylor is stepping down from his position as CEO to become the company’s executive chairman, according to a statement released by the company Tuesday afternoon. Company President Phong Le will take over the reins from Saylor.

Saylor has served as Chief Executive since the company’s inception in 1989. MicroStrategy went public in 1998.

MicroStrategy stock is down over 48% this year. Bitcoin is down over 51% over the same period.

“I believe splitting the roles of Chairman and CEO will allow us to better track both of our corporate strategies of acquiring and holding Bitcoin and growing our enterprise analytics software business. As Executive Chairman, I can focus more on our Bitcoin acquisition strategy and related Bitcoin advocacy initiatives, while empowering Phong as CEO to oversee overall company operations,” Mr. Saylor said in the release.

The announcement comes alongside the release of second-quarter results, which saw total revenue decline by 2.6% year-over-year. The company also reported a $918 million impairment on the value of its digital assets, thought to be mostly Bitcoin.

MicroStrategy may technically be in the enterprise software and cloud-based services business, but Saylor said the public company is also the first and only exchange-traded Bitcoin spot fund in the United States

“We’re like your non-existent spot ETF,” Saylor told CNBC on the sidelines of the Bitcoin 2022 conference in Miami in April.

So far, the Securities and Exchange Commission has only approved ETFs that track contracts that speculate on the future price of bitcoin, rather than the cryptocurrency itself. The commission has refused to give the green light to any of the formal applications for a pure bitcoin-based ETF – a financial instrument that would allow investors to invest in bitcoin without having to sign up for an exchange, crypto wallet, or deal with any of the other logistical tasks involved in buying and holding bitcoins.

“If there were a cash ETF, you would pay a 1% fee and there would be no leverage. With MicroStrategy, we have a software company that generates cash flow, so we convert our cash flows into Bitcoin,” he told Sailer in April.

MicroStrategy has added Bitcoin to its corporate balance sheet for the past two years. The company has now spent nearly $4 billion acquiring bitcoin at an average price of $30,700.

MicroStrategy has used corporate debt to buy bitcoin, and in March Saylor decided to take another step toward normalizing bitcoin-backed funding when he borrowed $205 million using his bitcoin as collateral — to buy more of the cryptocurrency .

“We have $5 billion in collateral. We borrowed $200 million. So I’m not telling people to go out and take out a heavily leveraged loan. I think what I’m doing is doing my best to lead the way in normalizing the bitcoin-backed finance industry,” Saylor said in April.

“When people realize they can borrow something, then they realize they never have to sell it, and then they start shifting their time horizon from – ‘It’s a 36 month speculation’ to – ‘It’s a 36 month speculation -year participation’. ‘”