MicroStrategy (MSTR) has become the poster child for Bitcoin investing, with its shares up more than 450% in the past year, outperforming Bitcoin, which has doubled since January 2024.
Wall Street analysts are also bullish on MSTR stock.
The consensus price target for the company’s stock is just under $550, indicating a potential upside of 70% from its current level.
The optimism stems from expectations that Bitcoin prices will continue to climb, a prospect that has fueled MicroStrategy’s aggressive capital raising efforts.
However, investors should remain cautious.
How Far Can MicroStrategy Stock (MSTR) Go?
MicroStrategy’s Bitcoin holdings stand at an impressive 447,470 coins, worth over $40 billion at current prices.
TD Cowen’s Lance Vitanza said in a recent report, “MicroStrategy represents a new kind of firm – the world’s first publicly traded Bitcoin treasury company – that can effectively satisfy the market’s appetite for volatility and returns.” into Bitcoin based on leverage.”
“What began as a defensive strategy to protect the value of its reserve assets has become an opportunistic strategy aimed at accelerating
Creating shareholder value,” Vitanza said.
Vitanza estimates that MicroStrategy will hold 712,000 Bitcoins by the end of 2027, which is about 3.4% of the total amount mined.
Mark Palmer, an analyst at Benchmark, is among those with the highest expectations for the company.
He estimates that Bitcoin will reach $225,000 by the end of 2026, by which time MicroStrategy’s holdings will be valued at $143.6 billion.
Palmer has set a price target of $650 for the stock, the highest on Wall Street, and he believes the company could have 638,400 bitcoins by that time.
Risks of a Bitcoin-Focused Strategy
Despite the excitement, MicroStrategy’s heavy reliance on Bitcoin presents significant risks.
First, the company plans to issue $2 billion in preferred shares to buy more Bitcoin The current plan to raise $21 billion for each into common stocks and fixed income instruments over the next three years.
Second, the company’s $82 billion market capitalization is almost double the value of its Bitcoin holdings, a rich premium that could backfire if Bitcoin prices decline.
Although the company also operates a traditional software business, its contribution to the company’s overall value is minimal, with analysts estimating annual revenues for 2025 to be less than $500 million – and an expected loss in 2024.
Investors are not buying stock for the company’s software business.
Thus, Bitcoin’s notorious volatility adds a significant layer of uncertainty to the company and its stock.
While the company’s average purchase price for Bitcoin is $62,503 – which provides a breather against current prices – any sharp decline in the cryptocurrency could seriously impact MicroStrategy’s stock.
Joseph Vafi, an analyst at Canaccord Genuity, said in a recent report that “there are a lot of investors out there scratching their heads when looking at MSTR through a traditional valuation lens” but that mainstream valuation metrics “don’t really apply anymore.” …Given the company’s software business is only a single-digit percentage of current enterprise value.
MicroStrategy Stock: Wall Street and Beyond
Several firms covering MicroStrategy, including TD Securities, BTIG and Canaccord Genuity, have ties to its recent equity offerings, raising questions about potential conflicts of interest.
These companies have largely maintained Buy ratings on the stock, aligning their forecasts with the company’s Bitcoin-powered strategy.
Outside Wall Street, crypto investor Anton Golub has praised Michael Saylor’s bold approach.
Golub sees this strategy as a cycle of endless Bitcoin accumulation, driven by MicroStrategy’s ability to maintain high stock prices.
However, he also warned that premium valuations could fall if Bitcoin prices fall or credit markets tighten.
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