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'I'm Busted' By Spencer Jakab

Stock futures are pointing to a higher open as Nvidia results were good enough , but confusion reigned on foreign stock exchanges and in currency markets following comments from President Trump on new import tariffs on the EU and conflicting dates for when they would be slapped on Canada and Mexico.

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Bitcoin is having a rough week. The cryptocurrency's largest owner, Satoshi Nakamoto, probably isn't worried since he doesn't seem to exist . No. 2, Michael Saylor, does, and he has more reason to fret than most.

The company Saylor co-founded and chairs, MicroStrategy, has made one of the biggest financial bets of all time on anything, much less a thing you can't see or touch. It hasn't earned a profit in years from its original business. Instead, it's now a vessel loaded with about 500,000 bitcoin out of 20 million that exist. Subtracting tokens owned by governments, "Satoshi," or that have been lost , that's more than 3% of supply.

He keeps on buying. Saylor has compared the opportunity to the Dutch acquiring Manhattan from the native Americans 400 years ago for some worthless trinkets. They didn't borrow $7 billion or throw in billions more in Dutch East India stock to seal the deal, though.

And there are even bigger numbers at stake-around $30 billion in stock-market value erased since its peak around Inauguration Day, according to FactSet. MicroStrategy, which nowadays prefers to be called just Strategy, was added to the widely followed Nasdaq-100 Index just weeks earlier. Now owners of funds meant to track stocks, not crypto, have indirectly shared in those losses.

So what's the strategy exactly? Bitcoin's price is so tied up with Saylor's game of financial chicken that it could plunge if he ever had to sell. It reminds one a little of the Underpants Gnomes from South Park .

Step 1: Collect underpants. Step 2: ? Step 3: Profit.

More ominously, it's also reminiscent of the Hunt Brothers , hammered 45 years ago next month on "Silver Thursday." Distrustful of government-issued currency like Saylor, they were once among America's richest families. Over many years they bought a third of all the silver in the world, multiplying their stake through derivatives. That helped push its price from $1.50 to a record $50 an ounce. On that fateful day, though, Herbert Hunt had to call regulators with the admission: "I'm busted."

Saylor is far from cornering bitcoin, but the "busted" part isn't implausible. And more than one family's fortune is at stake: Billions of MicroStrategy's convertible debt is owned by risk-averse investors . A recent issue now fetches just 76 cents on the dollar. Repaying it without actual cash requires the stock to keep rising.

Can it? That depends on bitcoin's price, which has experienced multiple meltdowns. Regardless, more air can come out of MicroStrategy's shares. It touts a nonsensical measure called "BTC yield" to show how good it has been at accumulating cryptocurrency per dollar raised. The market is catching on , valuing the stock at less than two times its net holdings from more than four times as much months ago. There should be no premium since anyone can now buy bitcoin through ETFs.

Saylor supports a massive U.S. " strategic bitcoin reserve " that would require tens of billions in taxpayer cash and send prices skyward.

"It's a way for us to emerge as a creditor nation in a matter of a decade," he said recently .

Doubtful , but it could make his company less of a debtor.

Stocks I'm Watching

Nvidia : The AI chip specialist's quarterly report was encouraging , but not quite encouraging enough to propel the shares much a month to the day after the DeepSeek shock. Its shares wavered premarket and look set for a small gain.

Salesforce : The software company's results beat analyst estimates on an adjusted basis, but its outlook for the year was weak , sending its stock down in premarket trading.

Mercedes-Benz : Shares of the luxury auto maker and its European peers with exposure to the U.S. market fell following President Trump's threat to put 25% tariffs on imports from the EU trading bloc.

Moderna : The vaccine maker is famous for developing of one of the widely used Covid vaccines people lined up for four years ago. Its stock fell after reports that a U.S. government contract to develop a bird-flu vaccine might be pulled by the department now headed by vaccine skeptic RFK Jr. Its shares were already down by nearly two-thirds in the past year.

EBay : The online auction pioneer's stock had trouble finding buyers in early trading after its revenue outlook for the first quarter disappointed investors .

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Nvidia Is Far From Running Out of Road

The hardest thing about being Nvidia these days is living up to the recent past. Its results and forecasts did that, but there are lingering fears that artificial intelligence is in a bubble and that investments in the field can't stay so high. The massive piles of cash that tech giants plan to pour into capital spending on AI this year should ease some of those fears , writes Heard on the Street tech columnist Dan Gallagher.

What I'm Reading In a blog post due out on Thursday, Microsoft will call for Trump's team to ease the limits on chips that can be used in data centers for training AI models so they no longer apply to a group of U.S. allies including India, Switzerland and Israel, company officials said. ( WSJ ) The "spy Sheikh," the billionaire brother of the president of the United Arab Emirates, wants to muscle his tiny nation to the front of the race to develop and control AI systems. The CEOs of Apple, Microsoft and BlackRock have all visited him. ( WSJ ) Tesla stock's epic fall has wiped out more than $600 billion of market value since mid-December. Elon Musk will be fine as he's still worth some $420 billion. Investors might want to pay attention to the changing distribution of his wealth, though. ( Barron's ) Make new friends, but keep the old. PayPal is striking a lot of new partnerships in the payments and commerce business these days, but its original cohort is still the most important: consumers. ( WSJ ) The number of births in Japan has fallen to another record low. That underscores the growing challenge of squaring ballooning social security costs for an aging society with what's already become an ever shrinking pool of tax-paying workers. ( Japan Times ) Beyond the Newsroom

Buy Side from WSJ: Yoga teachers recommend these yoga accessories to take your practice to the next level.

About Me

My name is Spencer Jakab and I've been musing about money and markets for more than 30 years, including editing The Wall Street Journal's Heard on the Street column for a decade, writing two investing books and running a team of stock analysts at a global investment bank.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

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February 27, 2025 06:34 ET (11:34 GMT)

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