Benchmark analysts raised their price target for MicroStrategy, pointing to the company's unique approach to growing its bitcoin holdings. Some argue that MicroStrategy's stock is overvalued, but the company's strategy continues to fuel analyst optimism.
Bitcoin went on a tear in the last quarter of 2024, leading many analysts to raise their price targets for companies like MicroStrategy, which are heavily invested in the asset.
In recent times Take note From Benchmark, analyst Mark Palmer raised the company's target for MicroStrategy stock (MSTR) to $245 from its previous estimate of $215.
Palmer highlighted the company's ability to leverage its bitcoin holdings through what he describes as “intelligent leverage.”
It refers to the use of microstrategy Convertible bonds To acquire bitcoin, it allows it to increase its reserves through low-cost borrowing without straining its cash flow.
The benchmark specifically tracks a company's BTC yield, a key performance indicator that measures the percentage increase in bitcoin holdings relative to shares.
In 2024, this metric hit 17.8%, surpassing previous years and highlighting MicroStrategy's ability to compound its Bitcoin investments over time.
value proposition
However, some critics argue that the high ratio between MicroStrategy's net asset value (NAV) and its stock price indicates that the stock is overvalued relative to its original bitcoin holdings.
Simply put, this means investors are paying a significant premium for MicroStrategy shares over and above the tangible value of its Bitcoin asset.
Join the community to get our latest articles and updates
But Palmer disagreed.
“MSTR's value is not just a function of its NAV, but a flywheel that uses a combination of low-cost debt and equity dilution to increase the amount of bitcoin it holds,” he wrote in a benchmark note. each share of its stock.”
This leveraged strategy has led the stock price to grow 1,600% since the company adopted its Bitcoin strategy in 2020 under the guidance of executive chairman and co-founder Michael Saylor.
Bernstein analysts also echoed this optimism, setting an even higher target of $290 with their prediction that Bitcoin could reach $1 million by 2033.
By September 2024, there is a microstrategy 252,220 BTCWorth about $10 billion.
Related TopicsMicroStrategyBitcoin
