As an analyst with a background in technology and finance, I have closely followed the developments at MicroStrategy and the crypto market. Based on my analysis of the available information, I believe that Jim Cramer’s warning against buying MicroStrategy stock should be taken with a grain of salt.
Famous CNBC host Jim Cramer recently took aim at business intelligence MicroStrategy.
The 69-year-old “Mad Money” host recently warned his audiences against buying the company’s stock.
For individuals aiming to gain experience with Bitcoin, it is recommended by Cramer that they buy the primary cryptocurrency itself.
The bull case
MicroStrategy has substantially outperformed Bitcoin on a year-to-date basis.
Based on the analysis of investment firm TD Cowen, there is a strong possibility that the stock will undergo a substantial growth spurt in the current year.
As a researcher studying the intersection of institutional investment and cryptocurrencies, I believe that institutions exploring Bitcoin Exchange-Traded Funds (ETFs) could serve as a significant bullish factor for MicroStrategy. TD Cowen’s analysis supports this perspective.
As an analyst, I would express it this way: I anticipate that the company will experience a positive impact due to the anticipated denial of Ethereum-based spot ETF approvals this month.
According to Saylor’s perspective, Bitcoin ETFs won’t harm MicroStrategy significantly due to their fee structures. In contrast, MicroStrategy offers “smartened-up investment exposure” to Bitcoin without levying any fees for its holders.
MicroStrategy’s Q1 results
In the previous month’s financial report, MicroStrategy disclosed a loss of $53.1 million during the quarter. However, the profits derived from Bitcoin holdings, which were recognized in Q1, did not appear in this latest announcement as the corporation has yet to adopt the new accounting standard.
As a financial analyst, I would rephrase that statement as follows: Based on Benchmark’s assessment last month, the company’s inclusion in the S&P 500 index could be a possibility if they were to adopt the newly required accounting standard.
Starting from 2025, companies are permitted by the Financial Accounting Standards Board (FASB) to record digital currencies on their balance sheets based on their current fair market value. Nonetheless, these new accounting guidelines may potentially be implemented prior to that date.
A wild ride
MicroStrategy is experiencing a surge in success due to the ongoing Bitcoin price increase. This turnaround follows a potentially precarious situation for the company in 2022, when Bitcoin underwent a significant downturn that brought it close to triggering a margin call for MicroStrategy. At that time, Jim Cramer publicly criticized Michael Saylor on social media.
“Microstrategy’s stock is under significant pressure due to its heavy borrowing against cryptocurrencies. It seems almost certain that a margin call will be triggered. But, one can’t help but wonder if the company has some hidden strategies in place to prevent this from happening? Please share any insights you may have.”
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2024-05-14 09:15