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MicroStrategy CEO Michael Saylor speaks at the Bitcoin 2021 Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida.

Joe Raedle | Getty Images

MicroStrategy was founded almost 35 years ago and existed for most of its history as a little-known software company focused on business intelligence.

But in 2023, the stock has soared 337%, making it one of the biggest gainers in the U.S. among companies valued at $5 billion or more, topping Nvidia’s 234% rally and Meta’s 194% surge.

Unlike its tech peers, which rely on revenue growth and market share gains to fuel their stock prices, MicroStrategy’s investor appeal is almost exclusively due to bitcoin. The company began buying the cryptocurrency in mid-2020 and has since amassed roughly 174,530 bitcoins, worth about $7.65 billion as of late Friday.

Wall Street is so enamored by the story that the stock has about doubled bitcoin’s gain this year.

“It’s really bitcoin,” said Joseph Vafi, an analyst at Canaccord Genuity who has a buy recommendation on the stock. “All the other stuff is healthy and doing a good job, they’re not neglecting it. It’s doing well, it’s leading software in its sector. But it’s basically something we don’t have to worry about.”

MicroStrategy’s market cap is $8.5 billion, meaning 90% of its valued is tied directly to its bitcoin holdings. When bitcoin plummets or soars, so does MicroStrategy. In 2022, bitcoin’s 64% drop pushed MicroStrategy down 74%. Even after its huge pop this year, MicroStrategy shares are still below where they were trading at their high in 2021, during peak crypto.

The bitcoin strategy dates back to July 2020, when the company said it would start putting some of its cash towards alternative assets, including digital currencies. At the time, MicroStrategy had a market cap of roughly $1.1 billion, built on a software business that had been shrinking since 2015. Annual revenue was just under $500 million, and profit was minimal.

At the halfway point of 2020, MicroStrategy had just over $530 million in cash and short-term investments on its balance sheet. Co-founder Michael Saylor, who was CEO at the time, saw that money sitting virtually idle on the sidelines due to low interest rates and wanted to put it to work.

From there, he had to decide whether equities, precious metals or bitcoin would be the best use of funds.

“The reason we decided to buy bitcoin is because bitcoin represents a form of digital gold,” Saylor said on the first earnings call after the company announced its strategy. “It’s harder than gold. It’s smarter, it’s stronger, it’s faster than gold.”

Saylor’s decision created a way for investors to have stake in bitcoin through routine purchases of stock, rather than having to buy the coins directly. Saylor, who stepped down as CEO last year and assumed the role of executive chairman, told CNBC’s Morgan Brennan last week that he expects the bull market in bitcoin to continue next year. He said 99.9% of the capital in the world is invested in real estate, stocks, bonds and commodities, with only 0.1% allocated toward bitcoin.

“People, as they get educated on digital assets, are realizing that they ought to be allocating more and more of their capital to this digital asset and so they’re moving from .1 to .2%,” said Saylor, who co-authored a book about bitcoin last year titled “What is Money?”

Bitcoin will continue to move forward in 2024, says MicroStrategy's Michael Saylor

Novel use of cash

MicroStrategy isn’t the first company to put some of its cash pile into alternative investments, and it’s not the last to look for ways to generate outsized returns on that money. Earlier this month, GameStop gave CEO Ryan Cohen, who gained minor celebrity status as an investor, permission to use company cash to purchase stock.

But MicroStrategy is unique in that it’s become viewed almost exclusively as a bitcoin holding company.

“Michael Saylor’s kind of a visionary,” said Vafi. “He saw this as an opportunity to really exploit the fact that they had a lot of cash and a pristine balance sheet and start this bitcoin treasury experiment. And it’s worked out well and so they’re continuing down that path.”

In analyzing why MicroStrategy’s stock has so dramatically outperformed bitcoin this year, Vafi described it as a “scarcity premium,” because there are limited ways for equity investors to tap the market.

That’s potentially changing in the new year, as investors gear up for a flurry of bitcoin exchange-traded funds (ETFs). Currently, there are bitcoin futures ETFs, which are comprised of contracts to buy and sell bitcoin but not of the cryptocurrency itself. And investors can buy into the Grayscale Bitcoin Trust, a fund that owns bitcoin and trades over the counter rather than on a major exchange.

Grayscale sued the SEC last year after the regulator denied its application to create a spot bitcoin ETF on concerns about investor protections. In August of this year, an appeals court ruled in favor of Grayscale, a decision than many in the industry viewed as paving the way for a new crop of ETFs. Asset managers, including BlackRock, Fidelity and Invesco, have filed with the SEC for their own products. 

Vafi said the prospect of competition poses little threat to MicroStrategy.

“I call it right now a very high-class problem to a certain degree,” he said. “If a bitcoin ETF gets approved, the price of bitcoin is probably headed higher and potentially materially higher.”

MicroStrategy also presents more than just a bet on the direction of bitcoin. While ETFs are passively managed, MicroStrategy has the option to put its bitcoin holdings to work, using them, for example, as collateral to create more business opportunities.

“MicroStrategy is encouraged by the continuing maturity of the regulatory environment around bitcoin as well as the increased institutional demand that we are seeing today,” Shirish Jajodia, the company’s vice president of treasury and investor relations, told CNBC in an email. “We do believe it will have a positive impact on the adoption of bitcoin by mainstream investors as well as corporations.”

MicroStrategy’s software business is a big plus too, Saylor said on the company’s most recent earnings call. It’s a proven cash flow generator, enabling the company to buy more bitcoin, he said.

For the many investors betting against MicroStrategy, it’s been a tough year.

As of early December, crypto stock short sellers were down $6.1 billion for the year, with the rally in Coinbase hurting them the most, according to S3 Partners. In the first three quarters of the year, short sellers spent $2.19 billion covering their bets, the firm said, with the majority of the buying in Coinbase and MicroStrategy.

Short sellers this year have lost $4 billion on Coinbase and $1.4 billion on MicroStrategy, according to data provided by S3 last week. Some 23% of MicroStrategy’s shares available to the public are shorted, S3 said, which is second highest among crypto companies, behind only bitcoin miner Marathon Digital. The average for U.S. stocks is 5%.

MicroStrategy shows no signs of slowing down when it comes to snapping pu bitcoin. The company said it purchased roughly 16,130 bitcoins in November for over $593 million, even with the price continuing to rise. That’s more bitcoin than it’s bought in any full quarter since the first three months of 2021.

— CNBC’s Kate Dore contributed to this report

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Bitcoin bounces back above $43,000: CNBC Crypto World

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Apple announces launch event on Sept. 9, iPhone 17 expected

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Apple announces launch event on Sept. 9, iPhone 17 expected

Apple announces an iPhone event on Sept. 9.

Courtesy: Apple

Apple on Tuesday sent invites to the media and analysts for a launch event at its campus on September 9 at 10 A.M pacific time.

The tagline on the invite is: “Awe dropping.”

Apple is expected to release new iPhones, as it usually does in September. This year’s model would be the iPhone 17. It also often announces new Apple Watch models in September.

While Apple’s launch events used to be held live, with executives demonstrating features on stage, since 2020 they have been pre-recorded videos. Apple said it would stream the event on its website.

Analysts expect Apple to release a lineup of new phones with updated processors and specs, including a new slim version that trades battery life and cameras for a light weight and design.

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Meta used National PTA to promote child safety efforts, report finds

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Meta used National PTA to promote child safety efforts, report finds

Meta CEO Mark Zuckerberg tries on Orion AR glasses at the Meta Connect annual event at the company’s headquarters in Menlo Park, California, on Sept. 25, 2024.

Manuel Orbegozo | Reuters

Since losing her 15-year-old son Riley to suicide following a sextortion scheme through Meta’s Messenger app, Mary Rodee has worked with advocacy groups to push for stronger protections for children online. 

“I hold them solely responsible,” Rodee said about Meta in an interview with CNBC. “They have a responsibility for the safety of their users.”

Rodee is among a number of parents who are increasingly critical of organizations that are supposed to help children stay safe but accept money from Meta and other social media companies. Among these groups is the National Parent Teacher Association. 

The National PTA is a nonprofit with more than 20,000 chapters and nearly 4 million members across the country that works with schools and families to advocate for children. The group’s website says its members “share a commitment to improving the education, health and safety of all children.”

A report published Tuesday by tech watchdog organization Tech Transparency Project alleges the group’s relationship with Meta “gives a sheen of expert approval” to the social media company’s “efforts to keep young users engaged on its platforms.” The report claims that Meta’s tactics are used to counter concerns that services like Instagram can be harmful to teens in an attempt to shape the public narrative. 

As Meta has come under growing pressure over its impact on kids and their well-being, the company has responded with a range of tactics to influence the public debate,” TTP wrote.

Meta has sponsored the National PTA for years, while the education advocacy group has promoted the company’s child safety initiatives without always noting its financial ties, TTP found.

The National PTA and Meta, the parent company of Facebook and Instagram, have worked together since at least 2010. Meta’s presence is listed in the group’s events and social media posts.

“It’s unforgivable,” said Rodee of Canton, New York. “I just can’t get over these groups that convince themselves that there’s not blood on their hands, that this money is clean.”

Both Meta and the National PTA declined to share how much the social media company has contributed to the group.

“We’re proud to partner with expert organizations to educate parents about our safety tools and protections for teens, as many other tech companies do,” a Meta spokesperson told CNBC in a statement.

In a statement to CNBC, the National PTA said that it doesn’t endorse any social media platform and it accepts sponsorship from Meta to have a “seat at the table” and to be a “strong, clear voice for parents and children.”

“Our collaboration with Meta provides an opportunity to help inform families about safety on its apps and the available tools (e.g., parental controls, age-gated features) and resources (e.g., parent’s guides, online safety centers),” the National PTA said in its statement.

Mary Rodee lost her 15-year-old son Riley to suicide following a sextortion scheme through Meta’s Messenger app.

Mary Rodee

Meta worked with the National PTA in 2017 to help roll out Messenger Kids, a chat app for children under 13 that the company said was developed in consultation with parent and safety groups, TTP wrote in its report. Facebook became a founding sponsor of the PTA Connected initiative the following year in 2018, the National PTA said in its statement to CNBC.

The National PTA can often be seen supporting Meta products on its Instagram account. For example, a post shared in June shows a group of PTA members at a digital safety workshop in front of a poster with Meta and the National PTA’s logo.

Riley, Rodee’s son, was a victim of sextortion on Meta’s platforms. Sextortion is the act of threatening to expose sexually compromising information unless certain demands are met. He was blackmailed by a person posing as a teenage girl on Facebook Messenger, Rodee said.

The fake account demanded Riley pay $3,500. He then took his own life, Rodee said. Sextortion schemes like this are on the rise across social media. The U.S. Department of Homeland Security received more than 3,000 sextortion tips in 2022, according to the Justice Department.

The Federal Trade Commission accused Meta in 2023 of misleading parents about their ability to control who their children communicate with on the Messenger Kids app. Meta has denied wrongdoing and is challenging both the FTC’s proposed restrictions and the constitutionality of the agency’s process.

A federal master complaint filed in March 2024 in California by school districts and local governments as part of a multi-district lawsuit against major social media companies alleges that platforms like Instagram and Facebook were intentionally designed to be addictive to young users. The complaint names the National PTA as one of the organizations Meta uses to reach children in schools.

“While Instagram may try to characterize this work as helpful to addressing youth mental health problems, they were more candid in other documents about using this as a strategy to get more teen users,” the filing states. “The goal of the parents plan was to get ‘parents to think, my kids are on social media, and my FAVORITE app for them to be on is Instagram, bar none.'”

In September 2024, Meta announced Instagram Teen Accounts, which gives users between 13 and 17 certain safeguards on the app. The release announcing the accounts included a quote from National PTA President Yvonne Johnson, without disclosing that Meta was a national sponsor of the organization.

“Given that parents today are grappling with the benefits and challenges of the internet and digital media for their teens, our association applauds Meta for launching Instagram Teen Accounts,” Johnson said in the release.

Instagram’s Teen Accounts feature has received mixed responses when it comes to how effectively it protects kids. Some users still saw inappropriate content on Instagram, according to a report from ParentsTogether.

“This strategy of telling parents that these products are safer than they really are puts kids in danger,” said Shelby Knox, online safety campaign director at ParentsTogether.

The Meta spokesperson said that Teen Accounts give protections to limit who can contact teens on Instagram.

Other parent groups like Smartphone Free Childhood U.S. and Parents for Safe Online Spaces have reached out to the National PTA to voice their concern of accepting money from social media companies that they say are dangerous to their children.

The National PTA’s other sponsors also include Google, YouTube, TikTok and Discord.

In 2024, TikTok gave the National PTA more than $300,000 for programs about teens and social media, even as the platform itself faced mounting criticism over its impact on teens.

The PTA is just one example of Meta’s strategy, according to the TTP report. Meta also created Trust, Transparency & Control Labs, also known as TTC Labs, in 2017. The organization works to collaborate on safety efforts.

While TTC Labs is clearly labeled as a Meta creation, TTC has produced reports on Instagram Teen Accounts and Horizon Worlds. Meta has cited these reports as evidence of its commitment to child safety.

Meta and other social media platforms have been blamed for causing harm to children. 

A bipartisan group of 42 attorneys general sued Meta in 2023, alleging features on Facebook and Instagram are addictive and are aimed at kids and teens.

In July, Meta said it eliminated 600,000 profiles linked to predatory behavior and enhanced direct messaging protections on Instagram.

“PTAs in schools are trusted organizations, so their support of companies that are using people and children for profit is just unforgivable,” Rodee said.

If you are having suicidal thoughts or are in distress, contact the Suicide & Crisis Lifeline at 988 for support and assistance from a trained counselor.

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EchoStar stock skyrockets 75% on AT&T deal to buy wireless spectrum for $23 billion

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EchoStar stock skyrockets 75% on AT&T deal to buy wireless spectrum for  billion

AT&T CEO John Stankey: EchoStar spectrum deal will accelerate growth & dramatically improve service

EchoStar stock roared more than 75% higher on Tuesday after AT&T said it agreed to purchase certain wireless spectrum licenses from the telecom company for about $23 billion in an all-cash deal.

The sale will add about 50 megahertz of mid-band and low-band spectrum to AT&T’s network, with the licenses covering more than 400 markets across the U.S., AT&T said. The deal is expected to close in mid-2026, pending regulatory approval.

EchoStar said in a regulatory filing that the transaction is part of the company’s “ongoing efforts to resolve the Federal Communications Commission’s inquiries.”

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FCC Chairman Brendan Carr wrote in a May letter addressed to EchoStar cofounder and Chairman Charlie Ergen that the agency’s staff would investigate the company’s compliance with federal requirements to build a 5G network.

The letter followed complaints from Elon Musk‘s SpaceX that EchoStar had left “valuable mid-band spectrum chronically underused,” and the FCC should take steps to let “new satellite entrants” put it to use.

SpaceX owns Starlink, which provides internet service through a constellation of low Earth orbit satellites.

As part of Tuesday’s announcement, AT&T and EchoStar also agreed to expand their network services agreement, enabling EchoStar to operate as a hybrid mobile network operator providing wireless service under the Boost Mobile brand.

“EchoStar and Boost Mobile have met all of the FCC’s network buildout milestones,” Ergen said in a statement. “However, this spectrum sale to AT&T and hybrid MNO agreement are critical steps toward resolving the FCC’s spectrum utilization concerns.”

AT&T CEO John Stankey told CNBC that the deal is “a win all the way around.”

“It’s a fantastic opportunity to see more services put together the way customers want to buy them together,” Stankey said in an interview on “Squawk Box.” “And as a result of that, I think ultimately regulators are going to look at this and say it’s very, very attractive.”

AT&T shares rose less than 1 percent.

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