MicroStrategy Inc. (NASDAQ: MSTR) has been riding the crypto wave, with its stock price surging alongside Bitcoin's (BTC) recent all-time highs.
Following my prior "strong buy" article rating, MicroStrategy's stock surged 86.59% to $351.73 due to strong growth in bitcoin holdings, but I am now downgrading the stock to "hold." Despite positive subscription revenue growth, MicroStrategy faces significant headwinds with -$340.2 million in net losses and declining software segment revenues. MSTR's market cap is significantly overvalued compared to its bitcoin holdings, with a premium near 3x, raising concerns about sustainability.
MicroStrategy just announced a bold new plan to buy $42 billion worth of Bitcoin during the next three years.
Michael Saylor has been spot on with his Bitcoin prediction (and backed it up with a monstrous bet). In a recent interview, he broke down his long-term bullish thesis for Bitcon.
The bull run continues for cryptocurrencies.
Shares of MicroStrategy Inc. entered record territory Monday for the first time in 24 years, as the self-proclaimed largest corporate holder of bitcoin continued to ride the postelection frenzy in cryptocurrency plays.
Software firm cum Nasdaq-listed bitcoin proxy MicroStrategy Incorporated (NASDAQ:MSTR) is not allowing all-time high bitcoin prices to dissuade it from buying vast sums of the world's largest cryptocurrency. Under the command of founder and bitcoin maximalist Michael Saylor, MicroStrategy bought another 27,200 bitcoins for $2.03 billion in cash between 31 October and 10 November.
There's still immense potential for the original crypto, but how much?
The long BTC, short MSTR pair trade mistakenly assumes that MSTR's premium to its BTC holdings is caused by an irrational market. The premium of MSTR market cap to BTC reserves is justified and comes from having a positive BTC Yield. The valid critique is that MSTR might be approaching a limit to how much convertibles they could issue over time.
Not all stock-split stocks share the same outlook, as these recently completed splits demonstrate.
The path to a trillion-dollar market cap for MicroStrategy is clear: Buy as much Bitcoin as possible.
A recent interview helps explain what MicroStrategy is doing with its strategy to issue securities to buy bitcoin.