A company with continuous losses in its main business has seen its stock price soar, even surpassing tech giant Nvidia! This sounds like a tall tale, but MSTR—MicroStrategy, the 'Bitcoin proxy'—has truly achieved this. Isn't it hard to believe? So, what is MSTR's charm that drives investors to pursue it so fervently?
MSTR's main business is software, but its performance has been mediocre in recent years, even suffering losses for three consecutive quarters. However, this does not prevent it from becoming a star stock in the US market. It turns out that MSTR's side business—Bitcoin investment—is the true driver of its soaring stock price.
Since starting to invest in Bitcoin in August 2020, MSTR has accumulated Bitcoin worth approximately $18 billion, becoming the world's most well-known 'Bitcoin proxy'. Its co-founder and chairman, Michael Saylor, has also leveraged investment strategies to borrow at extremely low interest rates to buy Bitcoin, enjoying substantial returns from Bitcoin's 50% compound growth rate over the past four years.
Although MSTR's financial reports show losses, investors seem unconcerned. They are more focused on the value of the Bitcoin held by MSTR and the company's determination to raise $42 billion over the next three years to continue buying Bitcoin. This firm belief in Bitcoin has caused MSTR's stock price to soar, even surpassing tech giants like Nvidia.
However, analysts have differing opinions on MSTR's surge. Some believe that the current stock price is already too high relative to its asset value and is unlikely to continue rising; whereas others believe that next year's new accounting standards will value the Bitcoin held by the company at market price, reversing MSTR's losses, making the stock still worth 'buying'.
So, can MSTR's stock price continue to soar? What are the secrets behind this?
Indeed, the surge of MSTR is not without reason. On one hand, Bitcoin, as the leader of digital currencies, is continuously rising in value and influence. As more institutions and investors begin to accept and recognize Bitcoin, its price is expected to continue to rise. MSTR, being one of the largest holders of Bitcoin, will also benefit from this.
On the other hand, MSTR's leveraged investment strategy has also brought huge returns. By borrowing at extremely low interest rates to buy Bitcoin, MSTR not only enjoys the gains from the rising price of Bitcoin but also reduces its own capital costs. This clever investment strategy has allowed MSTR to thrive in the Bitcoin market.
Of course, investing always comes with risks. The surge of MSTR may also just be a temporary phenomenon. If the price of Bitcoin were to dramatically decline or if regulatory policies were to change, MSTR's stock price could also be impacted. Therefore, while investors chase MSTR, they need to maintain a clear mind and rational judgment.
In summary, the surge of MSTR, the 'Bitcoin proxy', is not a coincidence. It is supported by the value of Bitcoin and clever investment strategies. However, investors also need to be cautious about the risks and challenges involved. Let's wait and see if MSTR can continue to create more miracles in the future!
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The above content is for informational sharing only and does not constitute any investment advice! Investing involves risks; enter the market with caution!
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