Coin World News Report:
MicroStrategy’s stock price rose 6% on Thursday to over $230, reaching a new high in nearly 25 years. This marks the sixth consecutive week of growth for MicroStrategy, the largest corporate shareholder in the world, driven by the continuous rise of Bitcoin.
Less than two months ago, MicroStrategy’s stock price was at $118 as Bitcoin hovered around $56,000 on September 6th, showing a downward trend. Since then, the price of digital assets has risen by 20% to reach $67,600, but MicroStrategy’s stock price has almost doubled in comparison.
MicroStrategy has shed its label as an enterprise software company and positioned itself as a Bitcoin development firm.
Earlier this month, MicroStrategy co-founder and CEO Michael Saylor stated that this effort involves becoming a “Bitcoin bank” and described it as creating “Bitcoin capital market tools covering equities, convertible bonds, fixed income, and preferred stock.” The company has also previously disclosed the creation of a decentralized identity protocol for Bitcoin.
The company’s treasury, holding 252,220 Bitcoins, is currently valued at $17 billion, accounting for over 1% of the total Bitcoin supply. MicroStrategy’s game plan for acquiring Bitcoin has dramatically changed since it first included Bitcoin in its balance sheet in 2020.
MicroStrategy has been leveraging equity and debt to acquire more Bitcoin than other means. This year, it involved issuing convertible notes, which can later be converted into stocks, and issuing equity through a fundraising plan.
According to asset management firm Bernstein, the company has provided Bitcoin leverage exposure and in a report this week, rated the company as “outperforming” with a target price of $290.
Bernstein analysts wrote, “We view MicroStrategy as a positive leveraged Bitcoin stock strategy for investors. It actively switches between equity and long-term convertible debt to provide Bitcoin leverage exposure while maintaining conservative leverage ratios.”
While spot Bitcoin ETFs have seen over $20 billion, MicroStrategy had already embraced Bitcoin before launching its own in January. Saylor recently stated that he sees the company as a bridge between traditional finance and digital assets, playing a crucial role.
He said, “If we didn’t exist, billions of dollars of capital from the traditional financial markets would not be invested in Bitcoin. The real business of MicroStrategy is to become a leading security issuer to acquire Bitcoin.”
With the recent rebound in MicroStrategy’s stock price, the company’s valuation has increased relative to its holdings of Bitcoin, reflected as a premium to net asset value (NAV). As of Thursday, this premium reached 2.7 times, the highest level since February 2021, according to reports.
Bernstein analysts wrote that MicroStrategy’s returns have been justifying the premium as its stock price has risen by 426% in the past year. Among the factors driving the premium for MicroStrategy, the asset management firm pointed out its demonstrated ability to increase the per-share holdings of Bitcoin and the limited number of comparable investment tools that provide leverage exposure.
Meanwhile, MicroStrategy also has some outspoken critics, including Bitcoin skeptics and economist Peter Schiff. On Tuesday, he argued on Twitter that MicroStrategy’s valuation and the advantages of its Bitcoin strategy would eventually reverse.
“MSTR is certainly the most overvalued stock in the MSCI World Index,” he wrote. “When it finally collapses, it will be a real massacre.”
Editor: Andrew Hayward
