According to Barrons, Benchmark analyst Mark Palmer gave MicroStrategy a "buy" rating and proposed a target price of $650 based on his estimate of the company's Bitcoin holdings in 2026. He expects the price of Bitcoin to reach $225,000 by the end of 2026.
Analysts are also willing to assign a price-to-earnings multiple to the theoretical gains MicroStrategy could create by issuing shares or bonds to buy Bitcoin, and MicroStrategy has cited a so-called Bitcoin "yield" (the ratio of changes in Bitcoin holdings to the number of outstanding shares) that has exceeded 70% this year. But this "yield" relies on the company selling shares at a premium to the value of its Bitcoin holdings, which is not certain.
MicroStrategy's high premium in 2024 is a special case. In 2022 and 2023, the company's stock price was almost in line with the value of its Bitcoin holdings, with a premium of about 20% at the end of 2023. If the Bitcoin premium continues to decrease and Bitcoin prices fall sharply, MicroStrategy's stock price may face further downside risk.
