MicroStrategy managing bitcoin loan, Roblox bookings fall amid strong dollar

Yahoo Finance Live anchors discuss the move in MicroStrategy stock after CEO Michael Saylor announced the company hasn’t received a margin call on its bitcoin loan as the crypto falls below $21,000, plus Roblox shares rise after the company reported lower bookings.

Video Transcript

Let’s talk more about some individual movers and one, of course, that is particularly pinned to the decline in Bitcoin. As the prices continue to fall, we’re watching MicroStrategy which is one of the stocks that’s actually bouncing back. CEO Michael Saylor has been out telling news outlets the company has not received a margin call against a $205 million Bitcoin backed loan it took in March. It’s not the first time though that Saylor has aimed to reassure investors. We asked him about that margin call back in May and whether it would be triggered if Bitcoin fell below $21,000.

MICHAEL SAYLOR: Look, we have five– we started with $5 billion of unpledged collateral, we borrowed $200 million against it, so that’s along the value of 4%. If Bitcoin fell 95% from that number then we’d have to post additional collateral. You know, people got their hands around the fact that we would adjust some collateral if Bitcoin ever got to $21,000, but it’s really a non-issue whatsoever. You can think of it as like leverage of 1.04. If I was levered 10 to 1 we would have borrowed $50 billion against that collateral, but we borrowed $200 million. It’s really– it’s a nothing issue.

Now the market has not necessarily viewed it as a nothing issue, but his comments also echoed by Mark Palmer, BTIG, who we spoke to the other day and effectively said the same thing. This is not– the market has been not understanding this issue correctly, but that said, they’ve been understanding the decline in Bitcoin and that MicroStrategy is heavily invested in Bitcoin so that also has something to do with the sell off that we have been seeing.

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And it’s really an evaluation of some of the crypto whales that are in the landscape as well. When you have companies like a MicroStrategy, or like a JPMorgan, or even some of the broader banks scenarios that have set up their own trading desks, that catches a ton of attention because you have big money, institutional money, that is now getting thrown into the cryptocurrency landscape, specifically Bitcoin.

Some of them have talked about Ethereum, but it’s really Bitcoin right now that is taking it on the chin from some of those all time highs even though we’ve seen this broader move lower for the entirety of the cryptocurrency landscape for MicroStrategy. What they represent is a whale in the space that if they did make any significant move, it’s going to send a broader wave throughout the rest of the Bitcoin hodlers right now if you will, too.

You know, I have to give an FTW for, or I guess a for the win, that’s Elon Musk because keep in mind he bought some crypto. He bought Bitcoin I believe, what was that? Last year? And put it on his balance sheet, but he didn’t go out there and buy anymore and I liked that he didn’t expose Tesla’s balance sheet to these type of wild swings and risks like you’re seeing over at MicroStrategy.

Well, can you give him an FTW when the stock is down 40% year to date?

I’m just– I’m just saying, you know, he, I think, took a more rational approach to, you know, taking on that type of risk on a balance sheet that you don’t want to take a lot of risk with because he’s trying to make electric cars. So Elon Musk, you got a win for me on that one.

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He also took on a big risk by dubbing himself the “Dogefather.”

Well, that too. Or that too, you know.

[LAUGHTER]

Let’s also talk about shares of Roblox this morning. RBLX, we’re tracking them, they’re moving higher by about 5% right now. That’s after key metrics showed roughly a 10% drop in estimated bookings for May. They had a 23% decrease in average bookings per daily active user year over year. There were some bright spots. The daily active users were up 17% year over year. Now this is just a May ’22 metric update that they were providing and hours and guage were also up 10% year over year.

And for Roblox, one thing that did get called out here is, again, something that we were talking about earlier this week, is the FX had when Microsoft had already signaled that. And it begged the question, or at least raised the question, of where some of the other companies who internationally were going to be exposed to the conversion, or at least the value of the dollar versus other currencies internationally where that FX impact would also have to get announced.

Yeah, I’m surprised that the shares are trading higher now. They were trading lower after this–

Yeah.

With you.

After this update came out, they were trading lower. Looking at that dollar exposure that we’re talking about. The company gets about 2/3 of its revenue, or at least did last year, from the US and Canada. About 19% or so from Europe. It looks like 7 1/2% from Asia-Pacific and then around 6% from the rest of the world so that’s the exposure that we’re talking about here. Perhaps that’s why the stock has turned around if investors are just looking at it as a currency issue.

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As we know, Roblox has been slowing in terms of the growth that it’s been seeing so the stock has been down before today. So it also talked about, though, you know, a drop in those estimated average bookings per daily users and that revenue’s still going to rise year over year, but bookings are an issue for this company. So I mean, the stock has been down a lot going into today.

For revenue being up in that instance though, does it really just signal then that they are having more strength on the user base that they already currently have? And are they able to kind of upsell or continue to have more of those engagements with the current base of users that actually props up the revenue in this instance? And at least in these forecasts, it seems so.

I think you hit the nail on the head, Julie. Slowing. So compared to what we just heard from Roblox when they reported their April metrics a couple of weeks ago, users slowed in this report this morning. Hours and gauge slowed and revenue growth slowed. All of which tells me they could report another challenging quarter here when they ultimately report in a few weeks.