Bernstein analysts address key investor questions about MicroStrategy's Bitcoin strategy with positive outlook.

From Investing.com: 2024-12-01 03:00:00

Bernstein analysts address key investor questions about MicroStrategy, focusing on its Bitcoin strategy and growth potential. With a 49% upside to the $600 price target, they reiterate an Outperform rating on the stock. MicroStrategy operates as a business intelligence software company but has pivoted to a Treasury firm, leveraging cash, debt, and equity to acquire Bitcoin. The company holds 386,700 BTC, representing 1.83% of the global Bitcoin supply.

MicroStrategy minimizes risks associated with its leverage strategy by controlling leverage to ~30% of Bitcoin net asset value. The company raised equity and reduced leverage during Bitcoin price drops in 2022, while taking advantage of lower leverage levels during price surges to raise more convertible debt. Michael Saylor defines Bitcoin yield as the annual growth in Bitcoin per diluted share, with MSTR’s BTC per share growing at a CAGR of ~25% since 2020.

Currently, MicroStrategy trades at a 189% premium over Bitcoin NAV, attributed to its leveraged exposure and active management strategy. Institutional investors and hedge funds are key buyers of MSTR convertibles due to the Bitcoin-linked upside with reduced risk. The company views Bitcoin as its “end game” and intends to hold its Bitcoin as permanent capital, exploring innovative funding mechanisms like preference shares.

MicroStrategy aims to raise $42 billion by 2027 split equally between debt and equity to scale its Bitcoin holdings. The company provides a leveraged Bitcoin play with active management and a unique strategy, while leveraging market conditions to raise more equity and convertibles to acquire more Bitcoin.



Read more at Investing.com: 10 key investor questions on MicroStrategy stock answered by Bernstein By Investing.com