MicroStrategy (MSTR) shares have surged more sixfold for the year to date, thanks to a sizzling rally in bitcoin prices. Indeed, the cryptocurrency has more than doubled since the start of the year and is now flirting with the $100,000 price point.
More recently, shares of the enterprise software company which has become a bitcoin proxy, are up more than 120% in the past month as bitcoin has rallied north of 40%.
The key driver behind MicroStrategy's jaw-dropping climb up the price charts is its massive bitcoin holding. As of November 11, the company held 279,420 bitcoins, which it purchased for approximately $11.9 billion, or about $42,692 per bitcoin. With the digital asset now trading at about $97,000, MSTR's holdings are worth just over $27 billion.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"MicroStrategy transformed itself from a software company focused on product and subscription revenues to a bitcoin development company, owning ~1.3% of total bitcoin in circulation," wrote Bernstein analyst Gautam Chhugani in an October 7 note.
"Since adoption of its Bitcoin Strategy in August 2020, MSTR's stock is up roughly 13 times, outperforming bitcoin, gold, the S&P 500, the Nasdaq, and small-cap software," he added. "Its software business is ex-growth, and thus MSTR's growth has been led by its bitcoin acquisition strategy, funded by internal treasury, debt, and equity."
And the company only intends to buy more bitcoin. In a November 20 press release, MicroStrategy disclosed a convertible senior notes offering and intends to use the proceeds "to acquire additional bitcoin."
In addition to being a pioneer of bitcoin as a treasury asset, MicroStrategy hosts a Bitcoin for Corporations conference each year to evangelize the strategy, Chhugani said.
"Bitcoin to $100,000 seems around the corner and our $200,000 bitcoin target for 2025 now looks not as delusional," Chhugani wrote in a November 18 note.
Is MicroStrategy stock a buy, sell or hold?
Amid the MicroStrategy's blazing rally, Wall Street has grown increasingly bullish on the tech stock. According to S&P Global Market Intelligence, the consensus recommendation among the nine covering analysts it tracks is a Strong Buy, up from Buy in April.
However, analysts' price targets have not been able to keep up with MSTR's surging stock price. Indeed, the average analyst price target of $341.23 represents a discount of more than 20% to current levels. A continued rise in MicroStrategy and bitcoin could encourage Wall Street to increase its price targets.
Related Content
-
What Can Accredited Investors Do?As an accredited investor, you will have access to a more diverse pool of investment options. Here's what you need to know.
-
Buying an Insurance Policy: Three Ways to Do ItYou can buy an insurance policy through an insurance agent or broker or on the internet. Which way works best for you?
-
Stock Market Today: The Dow Adds 15 Points To End Its Losing StreakEquity indexes opened higher but drifted lower as markets priced in new Fed forecasts.
-
10 Ways Your 1031 Exchange Can Go Horribly WrongDon't let your tax-saving strategy become a financial nightmare — discover the hidden pitfalls that could turn your 1031 exchange into a costly disaster.
-
From Entrepreneur to Retiree: Boosting Your Business' ValueWhen business owners contemplate retirement, their first step should be maximizing the value of their biggest asset. Here are a few steps that could help.
-
Stock Market Today: Dow Dives 1,123 Points After FedMarket participants reacted predictably to a well-telegraphed hawkish turn by the Federal Reserve.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are SayingFederal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
-
Jabil Stock Pops After a Beat-And-Raise QuarterJabil stock is higher Wednesday after the electronics firm beat earnings expectations and raised its full-year outlook. Here's what you need to know.
