MicroStrategy (MSTR) has accomplished a financial feat that few anticipated. The company’s stock has surged by more than 1,000% since embracing Bitcoin as a reserve asset in August 2020, outpacing all S&P 500 (SPX) companies. As per River Financial, MicroStrategy currently possesses an astounding 252,220 Bitcoin, which is estimated to be worth almost $16 billion.
Bitcoin Explodes MicroStrategy Market Valuation
MicroStrategy had a $1.4 billion market cap before jumping fully into Bitcoin. In the present day, the company’s market capitalization has skyrocketed to a staggering $30 billion, signifying a growth of more than 2,000%. Saylor claims that this sharp increase defies known financial thinking. According to him, “Bitcoin is the one major asset that is accretive,” meaning that as the business raises more money, shareholder value increases rather than decreases.
Experts Analyze MSTR Price Targets
Taking notice, Barclays increased its target price for MicroStrategy (MSTR) from $146 to $173, noting the company’s capacity to release 70,000 bitcoins. As a result, MicroStrategy can pursue its Bitcoin accumulation plan even more aggressively. The business is, according to the firm, in a “comfortable position” to raise its Bitcoin holdings.
With a higher price objective of $200.00, TD Cowen analyst Lance Vitanza has kept his Buy rating on MicroStrategy. Vitanza, a 5-star analyst suggests a success percentage of 55.7% and an average return of 21.9%. Vitanza covers a range of NA equities, such as TKO Group Holdings and Clear Channel Outdoor. MicroStrategy’s traded at $149.97 at the time of writing.
Following up on its recent $1 billion senior notes issue, MicroStrategy is still acquiring Bitcoin. The business further solidified its status as a pioneer in the cryptocurrency space by investing $458.2 million to buy 7,420 additional bitcoins as of mid-September. The Financial Times claims that MicroStrategy is not about to slow down.
Should You Invest in MSTR?
MSTR stock continues to be highly regarded by analysts, who have given it a consensus Strong Buy rating based on 27 Buys and 9 Holds. MSTR has increased by a staggering 358% in the last year, and the average price target of $189.71 for the stock suggests a possible upside of 25.5% from present levels.
Final Thoughts
MicroStrategy’s decision to embrace Bitcoin as a reserve asset has yielded remarkable financial results, transforming its market valuation and boosting its stock price exponentially. This unconventional strategy has placed the company in a unique position, demonstrating that high-risk, high-reward approaches can sometimes pay off handsomely.
By amassing a significant Bitcoin reserve, the company has capitalized on Bitcoin’s volatility and overall long-term appreciation, driving a 2,000% market cap increase. Such growth, fueled by a relatively speculative asset, challenges traditional investment strategies, and raises interesting questions about the sustainability of this model, especially as Bitcoin remains highly unpredictable.
On the other hand, the success of MicroStrategy’s bold Bitcoin strategy hinges on continued favorable market conditions for cryptocurrency, which could be a double-edged sword. While analysts remain optimistic with strong Buy ratings and upward price targets, this heavy reliance on Bitcoin introduces considerable risk.
If Bitcoin were to experience a prolonged downturn, MicroStrategy’s value could be severely impacted. Investors should weigh the potential for further upside against the volatility of the cryptocurrency market, as the company’s future may largely depend on Bitcoin’s trajectory rather than its core business operations.
Victor Swaezy
Victor Swaezy is a crypto-journalist with more than 3 years of experience in covering blockchain technology and digital currencies news. Known for his comprehensive reporting, Victor has contributed to leading industry publications, providing market participants with the required knowledge to make informed decisions. When he is not working, he loves to watch movies and have a good time.