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
-
Baby Boomers vs Gen X: Who Spends More?Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
Retire in Finland and Live the Nordic DreamHere's how to retire in Finland as a US retiree. It's ideal for those who value natural beauty, low crime and good healthcare.
-
You're Close to Retirement and Cashed Out: How Do You Get Back In?If you've been scared into an all-cash position, it's wise to consider reinvesting your money in the markets. Here's how a financial planner recommends you can get back in the saddle.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
Stock Market Today: Good Feelings and Solid Data Lift StocksResilience and de-escalation defined another generally positive day for financial markets.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden RisksPotential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid OffLife insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.
-
Stock Market Today: Tesla Drags on Stocks Amid Musk-Trump FeudSentiment has soured between President Trump and his once-loyal ally, Tesla CEO Elon Musk.
