MicroStrategy Doubles Down on Bitcoin, Eyes $42B Investment
The company also recently announced that it will raise $21 billion through an at-the-market offering of its stock, some of which it will use to buy additional Bitcoin. The offering forms part of a general move the company is making to spend $42 billion over the next three years on buying Bitcoins- a pledge to an aggressive Bitcoin acquisition plan.
Canaccord analysts noted that such a leverage strategy for MicroStrategy allows the stock to maintain or even extend its premium over the Bitcoin spot price. That premium could again emerge as the company continues to commit leveraged investments into Bitcoin, adding an attractive differential for equity investors desiring indirect exposure to the Bitcoin price move through MSTR shares.
Vafi also keeps a more general optimistic outlook on Bitcoin. According to him, two factors are helping Bitcoin move upward: the recent authorization of spot Bitcoin ETFs in the US and the growing investor adoption of this asset class, combined with the supply squeeze caused by the Bitcoin halving event earlier this year. Vafi believes These forces joining will keep Bitcoin in a bullish environment, with appreciation continuing to be fired by demand from ETFs and further accentuated by supply scarcity.
Analyst: MSTR’s Bitcoin Bet is Paying Off
Benchmark analyst Mark Palmer recently also followed and lifted the price target for MicroStrategy stock to $300 from $245. The stock was trading at $248 as of 2 pm ET Thursday, up 0.4% on the day. The company’s aggressive Bitcoin buying program kicked off in August 2020, and it has seen the company commit $9.9 billion through capital markets and cash flow to amass its hoard of Bitcoins.
Now, MicroStrategy plans to raise $10 billion in 2025, $14 billion in 2026, and $18 billion in 2027, a phase Palmer describes as “even more audacious.” He emphasizes the strategy’s success, with MSTR’s stock up about 1,700% since adopting Bitcoin as its reserve asset.
Year-to-date, MSTR extends its lead over Bitcoin, with the stock price up 257% while Bitcoin is up 59%. However, Palmer points out that, when it comes to the valuation of MicroStrategy stock, a more relevant metric than taking its market cap against net asset value is its “BTC yield,” meaning the change in the ratio between its Bitcoin holdings and fully diluted share count. For the year, the company’s BTC yield is currently at 17.8% versus 43.3%, but well above last year’s 7.3%.
Under the 21/21 plan, MSTR executives have revised their target for BTC yield for the next three years from an initial estimate of 4-8% to a range of 6-10%. This reveals growing confidence in the strategy while continuing to pursue aggressive Bitcoin accumulation in the name of shareholder value.
