MicroStrategy (MSTR) Stock Price To Hit $300 Amid $42B Bitcoin Buying Plan

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As a seasoned researcher with over two decades of experience in the financial markets, I find myself intrigued by MicroStrategy’s aggressive Bitcoin strategy. Having closely observed the evolution of the cryptocurrency market, I have witnessed its potential and the transformative impact it can have on companies that embrace it.

 

According to Canaccord, they’ve increased their projected price for MicroStrategy shares (MSTR) from $173 to $300 while maintaining a “Buy” recommendation. This adjustment comes following MicroStrategy’s announcement of a $21 billion ATM stock offering, which the company plans to use, together with certain fixed-income offerings, to potentially buy up to $42 billion worth of Bitcoin within the next three years.

Canaccord appeared quite assured about this method, emphasizing that it aligns perfectly with their strategic vision for capitalizing on the potential increase in the value of Bitcoin over the long term.

MicroStrategy Stock a “Buy” – Canaccord

According to Canaccord Genuity, they’ve increased their projected price for MicroStrategy shares from $173 to a new target of $300, while maintaining their “buy” recommendation. However, despite this positive outlook, the stocks were slightly lower by 0.64%, trading at $242.94 on Friday.

MicroStrategy (MSTR) Stock Price To Hit $300 Amid $42B Bitcoin Buying Plan

MSTR, founded by Michael Saylor, provides a highly effective route for equity investors to gain Bitcoin exposure. Its unique strategy of purchasing Bitcoin makes it an attractive option for investors seeking to profit from Bitcoin’s price fluctuations without directly owning the digital currency.

According to Canaccord analysts, particularly Joseph Vafi, if a company’s stock performance is an indication of its business model’s robustness, then MicroStrategy (MSTR) stands out as one of the strongest in its sector. Since adopting its Bitcoin strategy in 2020, the company has surpassed both the broader stock market and Bitcoin itself, demonstrating a strong connection to increased shareholder returns when the cryptocurrency increases in value.

MicroStrategy Doubles Down on Bitcoin, Eyes $42B Investment

The company also recently announced that it will raise $21 billion through an at-the-market offering of its stock, some of which it will use to buy additional Bitcoin. The offering forms part of a general move the company is making to spend $42 billion over the next three years on buying Bitcoins- a pledge to an aggressive Bitcoin acquisition plan.

Analysts at Canaccord Genuity pointed out that MicroStrategy’s use of leverage in Bitcoin investment keeps or even boosts its stock value above the current Bitcoin market price. This premium may reappear as the company continues to make leveraged investments in Bitcoin, offering an appealing difference for investors who want indirect exposure to Bitcoin price fluctuations via MSTR shares.

Vafi maintains a broadly positive perspective on Bitcoin. He thinks that two key factors are propelling Bitcoin higher: the recent approval of spot Bitcoin ETFs in the US and the increasing number of investors adopting this asset class, along with the scarcity in supply resulting from the Bitcoin halving event earlier this year. Vafi is confident that these influences will keep Bitcoin’s market in an uptrend, with price growth being driven by ETF investments and further boosted by the limited supply.

Analyst: MSTR’s Bitcoin Bet is Paying Off

Analyst Mark Palmer has just increased his price prediction for MicroStrategy shares to $300, previously set at $245. As of 2 pm ET Thursday, the stock was trading at $248, marking a 0.4% increase for the day. The company’s Bitcoin acquisition strategy, which began in August 2020, has resulted in a commitment of approximately $9.9 billion through various capital markets and cash flow to accumulate its substantial Bitcoin holdings.

In the coming years, MicroStrategy aims to secure funding totalling $10 billion in 2025, $14 billion in 2026, and another $18 billion in 2027 – a plan Palmer labels as “even more daring.” He underscores the strategy’s success, noting that MSTR’s stock has soared approximately 1,700% since they made Bitcoin their primary reserve asset.

As an analyst, I’ve observed that so far this year, MicroStrategy (MSTR) has outperformed Bitcoin significantly. The stock price has surged by approximately 257%, contrasted with Bitcoin’s gain of 59%. However, it’s essential to consider a different perspective when evaluating the value of MicroStrategy shares. Instead of looking at market capitalization versus net asset value, Palmer suggests focusing on the “BTC yield,” which refers to the variation in the proportion between the company’s Bitcoin holdings and its fully diluted share count. In terms of this metric for the year, MicroStrategy’s BTC yield stands at 17.8%, compared to last year’s 7.3%. Yet, it’s worth noting that it currently lags behind the 43.3% recorded in a previous period.

In light of the 21/21 plan, MSTR executives have adjusted their projected Bitcoin return for the coming three years from an original forecast of 4-8% to a new range of 6-10%. This adjustment suggests increasing faith in the strategy and a commitment to persistent Bitcoin acquisition, all in the interest of maximizing shareholder value.

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2024-11-01 17:57