MicroStrategy (MSTR.O) stock price may continue its stunning upward trend, thanks to its "unprecedented" Bitcoin strategy.
This is a point mentioned by Bernstein analysts in a report to clients this week. Since the beginning of this year, MicroStrategy's stock price has soared nearly 500%, about 2.7 times the increase of Nvidia during the same period. Bernstein analyst Gautam Chhugani believes that MicroStrategy's upward momentum may further expand. He raised MicroStrategy's target price from $290 to $600, which means there is still a 49% upside compared to the current level.
Chhugani stated, "MicroStrategy's Bitcoin asset reserve model is unprecedented on Wall Street," and he also said that the company is a "Bitcoin magnet" for institutional investors.
The software company led by Michael Saylor currently holds 386,700 Bitcoins, accounting for about 1.8% of the total supply of 21 million.
According to Chhugani's predictions, MicroStrategy may hold 4% of the total Bitcoin supply by the end of 2033, as it will continue to raise funds under attractive financing conditions to purchase more Bitcoin. Based on Bernstein's target price of $1 million per Bitcoin, the value of these Bitcoins will ultimately represent about 4% of the total supply.
Chhugani said, "The Bitcoin bull market will mean that MicroStrategy's premium could be above historical averages, allowing the company to issue more debt or equity to purchase more Bitcoin."
Currently, MicroStrategy's market capitalization is close to $100 billion, nearly 200% higher than the value of its $36 billion Bitcoin assets.
One key reason for Chhugani's optimism about MicroStrategy is that the company has been a pioneer in incorporating cryptocurrency into its balance sheet in the corporate world. This strategy began in August 2020, allowing MicroStrategy to raise significant funds to purchase more Bitcoin.
The company announced in October of this year that it plans to raise $42 billion through debt and equity sales over the next two years to purchase Bitcoin. Since the announcement, the company has raised $9 billion, and Chhugani believes its progress is ahead of schedule, expecting it to complete the remaining $33 billion financing target within 18 months. Subsequently, Barclays also raised its target price from $275 to $515, maintaining an overweight rating on the stock.
However, MicroStrategy's bullish logic ultimately depends on the continuous rise in Bitcoin prices, which Chhugani believes is highly likely. Analysts expect Bitcoin's price could reach $200,000 at the peak of the cycle in 2025, $500,000 in 2029, and exceed $1 million in 2033. Chhugani stated,
"Bitcoin is in a structural bull market, benefiting from a favorable regulatory environment, support from the US government, institutional adoption, and a favorable macroeconomic environment (low interest rates, inflation risks, and record fiscal deficits)."
Article reposted from: Jin Shi Data
