MicroStrategy stock has soared due to Bitcoin purchases, but future performance depends on high-stakes strategy

From Nasdaq Corporation

January 20, 2025 07:12:00 AM:

MicroStrategy (NASDAQ: MSTR) transformed in 2020 when it bought 21,454 Bitcoins for $250 million, growing its stash to 450,000 Bitcoins by Jan. 13. This represents 49% of its enterprise value of $94.69 billion, with each Bitcoin costing $62,473. Despite a stagnant software business, the stock has soared 2,550% in five years.

MicroStrategy’s CEO Michael Saylor predicts Bitcoin could reach $13 million by 2045, with Bitcoin becoming 7% of global capital. The company’s plan to raise $42 billion by 2027 to buy more Bitcoin may lead to more debt and share dilution. Despite this, investors are watching closely as MicroStrategy’s Bitcoin holdings grow.

As of the third quarter of 2024, MicroStrategy’s total liabilities rose to $4.57 billion, with a debt-to-equity ratio of 1.2. The company’s leverage spiked due to its Bitcoin purchases, but its growing Bitcoin holdings could offset its rising debt. MicroStrategy’s stock may continue to rise alongside Bitcoin’s momentum.

The Motley Fool’s Stock Advisor team doesn’t recommend MicroStrategy, citing other promising stocks. The service has historically outperformed the S&P 500, offering valuable insights for investors. Consider potential risks and returns before investing in MicroStrategy, as its future performance hinges on its high-stakes Bitcoin strategy.

Read more at Nasdaq: Where Will MicroStrategy Stock Be in 5 Years?