MicroStrategy (NASDAQ:MSTR) shares are gaining attention with Bitcoin approaching its all-time high. The Michael Saylor-led company has made stockpiling as much BTC as possible its primary objective – a strategy that has paid off handsomely. By September 19, MicroStrategy had accumulated 252,220 bitcoins on its balance sheet, valued at over $18 billion.
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Benchmark analyst Mark Palmer highlights that the strongest testament to the success – and continued promise – of this acquisition strategy is the “dramatic outperformance” of MSTR stock over the past four-plus years.
Since MicroStrategy began purchasing BTC in August 2020, the share price has climbed by more than 1,600%, not only handily beating the return of Bitcoin by a factor of 3.8x during the period, but also making mincemeat of the returns generated by the S&P 500 and the Nasdaq, outpacing them by 22x and 24x, respectively.
MicroStrategy is set to report Q3 earnings today (Wednesday) after the close, but to be fair, the value of the stock is hardly tied to the results but is all about the Bitcoin holdings. And for those arguing that the premium to net asset value (NAV), which currently stands at 2.86x, is out of whack, Palmer thinks they are missing the point.
These naysayers are “overlooking the impact of the unique engine for shareholder value creation that the company has built” since it set off on its Bitcoin acquisition journey. “The upshot is that the value of MSTR is not just a function of its NAV,” Palmer went on to say, “but of the flywheel through which it uses a combination of low-cost debt and equity dilution to increase the amount of Bitcoin it holds for each share of its stock, in our view.”
Palmer is evidently a big MSTR bull, rating the stock a Buy but the shares have now zoomed past his $245 price target. (To watch Palmer’s track record, click here)
BTIG analyst Andrew Harte is also a fan and think the gains notched since last reporting have been partly down to the market applauding recent capital raises, because the funds were used to eliminate high-interest debt, which had been a concern for some investors.
The stock remains the “premier vehicle for bitcoin exposure via the public equity markets,” and for it to continue to be that, the 5-star analyst thinks the company should keep on doing more of the same, essentially. “We think the more bitcoin it can acquire only helps valuation as it puts less and less emphasis on its software business as it works through a license to subscription revenue model transition period,” he explained.
Similar to the Benchmark situation, while Harte rates the shares as a Buy too, the shares have left his $240 price target in the rear-view mirror. (To watch Harte’s track record, click here)
Likewise for the rest of the Street. On the rating front, based on a unanimous 8 Buys, the analyst consensus rates MSTR shares a Strong Buy. However, the average target stands at $220, factoring in a 12-month drop of 13%. It will be interesting to see whether analysts boost their price targets or downgrade their ratings shortly. (See MSTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
