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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 a proxy for Bitcoin, have risen more than 120% in the last month as Bitcoin has rallied more than 40%.
The main reason for MicroStrategy’s surprising rise in price ratings is its large Bitcoin holding. As of Nov. 11, the company held 279,420 bitcoins, which it had purchased for about $11. 9 billion, or about $42,692 per bitcoin. is now trading at about $97,000, MSTR’s holdings are worth just over $27 billion.
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“MicroStrategy has transformed from a software company based on product and subscription revenue to a bitcoin progression company, holding approximately 1. 3% of the total bitcoins in circulation,” wrote Bernstein analyst Gautam ChhuganiArray, in a note dated October 7.
“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 intends to buy more bitcoins. In a Nov. 20 press release, MicroStrategy unveiled a convertible senior note it is offering and intends to use the proceeds “to earn more 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’s price at $100,000 is imminent and our target of $200,000 by 2025 is no longer so illusory,” Chhugani wrote in a Nov. 18 note.
Amid MicroStrategy’s meteoric rally, Wall Street is increasingly bullish on tech stocks. According to S&P Global Market Intelligence, the consensus advice among the nine analysts it follows is a Strong Buy, up from April’s Buy.
However, the analysts’ goal was not to keep up with the value of MSTR’s emerging stock. In fact, the average analyst target value of $341. 23 represents a reduction of more than 20% from existing levels. A continued rise in MicroStrategy and Bitcoin could inspire Wall Street to raise its value targets.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor’s degree in business administration.