I do not really understand convertible bonds at all nor the appeal of a 0% interest rate, but I guess this makes sense:
A bond investor might sell those bonds before they mature and reap significant upside, particularly if a company’s stock has been doing well. The debt also can be held to maturity, when an investor receives their investment back in full, plus any upside in stock or cash.
On the flip side, if a company’s stock doesn’t work out, they can be asked to buy back their convertible bonds before they mature, making those investors whole.
Convertible bonds were designed to be less risky than owning a company’s stock or bitcoin outright, because bonds rank senior in payment priority if a company does go bankrupt, whereas the worst-case scenario for the other two asset classes would be a total loss.
So it seems less risky than Bitcoin or stock, but you still get the upside if it does well. You forgo interest rates for that reduced risk.
I was curious about the $6B in BTC the US Treasury was cleared to sell and if that might affect MSTR, but I don't think short-term volatility really affects them - the danger for them is a long bear market where they have to pay out lots of loan maturity and don't have the cash on hand.
So if BTC drops and/or the price stock price drops
I think a huge mistake that MSTR investors are making is assuming the value of MSTR is somehow tied to Bitcoin in the first place. It's clearly not because MSTR is already on record as saying they're never going to sell the BTC... and especially not to do stock buybacks. The value of MSTR stock has nothing to do with the price of BTC but the market seems to think it does, which thus far is creating a self-fulfilling prophecy.
Curious to see how long this can continue... I'm guessing MSTR gets absolutely wrecked in the bear... it's basically a shitcoin at this point and people will realize the value of the stock can easily go lower than the amount of BTC they hold... just like Greyscale before them with the 30% discount before spot ETFs were approved and their product was just a vaporous futures contract.
Sooooooo.... if MSTR is never ever going to sell BTC - what money will they use to pay off the investor loans when they mature? Does MSTR have other revenue streams? I didn't think they did.