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MicroStrategy Stock Price in 5 Years: Can MSTR Shares Continue to Ride Bitcoin Momentum?

Last Updated January 3, 2024 11:02 AM
Giuseppe Ciccomascolo
Last Updated January 3, 2024 11:02 AM
Key Takeaways
  • MicroStrategy’s stock price is closely tied to the price of Bitcoin.
  • If Bitcoin prices rise, MSTR’s stock price is likely to rise as well.
  • Between Bitcoin halving and ETF approval, where will Michael Saylor’s company stock arrive in the future?

In the dynamic world of cryptocurrency, MicroStrategy stands as a beacon of innovation, and its stock price is intricately linked to the fortunes of Bitcoin.

As the leading cryptocurrency navigates the turbulent waters of the market, investors eagerly await insights into the trajectory of MSTR shares in the years to come.

MicroStrategy’s bold foray into Bitcoin territory has been met with both applause and skepticism. While some hail the company’s decision as a visionary move, others caution against the risks associated with such a concentrated exposure to a single, highly speculative asset.

Saylor To Buy More Bitcoin

MicroStrategy’s executive chairman, Michael Saylor, has initiated a four-month process to sell $216 million worth of his shares in the company. The move, disclosed in a January 2 filing with the United States Securities and Exchange Commission (SEC), involves the sale of 315,000 stock options awards granted to him in April 2014. These options expire on April 30, 2024. Saylor began the process on January 2 by selling the first tranche of 5,000 shares.

During MicroStrategy’s third-quarter earnings call on November 2, Saylor announced his plan to sell 5,000 MSTR shares daily for the next four months. The proceeds will address personal obligations and increase his Bitcoin holdings. Saylor emphasized that despite his personal sales, his stake in the company’s equity remains “significant.”

SEC filing
Saylor-MicroStrategy filing at the SEC

According to a November 1 Q-10 filing with the SEC, Saylor can sell a maximum of 400,000 shares of his vested options between January 2 and April 26 this year.

While Bitcoin experienced a 170% rally in the past year, MicroStrategy has outperformed the cryptocurrency, gaining 411% over the same period, according to TradingView  data. On December 27, MicroStrategy added 14,620 Bitcoin to its holdings for $615 million, bringing its total Bitcoin holdings to an impressive 189,150 Bitcoin, valued at around $8.5 billion at current prices.

2023 Notable Surge

MicroStrategy’s stock performance in 2023 was exceptional, soaring by over 300%. This remarkable growth was primarily attributed to the company’s substantial Bitcoin holdings, which have increased in value alongside the broader Bitcoin market.

The company’s decision to invest heavily in bitcoin was initially met with skepticism from some analysts and investors. However, the surge in Bitcoin prices in 2023 has validated MicroStrategy’s strategy and rewarded those who invested in the company’s stock.

Microstrategy stock performance in 2023
Microstrategy stock performance in 2023

In addition to the Bitcoin gains, MicroStrategy’s software business also showed signs of improvement in 2023. The company’s subscription revenue grew by 38% year over year, which helped to offset declines in product license and support revenues. Overall, MicroStrategy’s financial performance in 2023 was strong and the company may continue its growth in the future.

This remarkable performance has made MicroStrategy one of the biggest gainers in the U.S. equity market in 2023. The company’s success is due to its innovative approach to business and its willingness to take risks. While the stock’s future performance may depend on the further growth of the Bitcoin market, MicroStrategy’s strong fundamentals and diversified business model suggest that the company may continue its success in the years to come.

Gaining From Bitcoin Ride

In a recent announcement, MicroStrategy revealed its ownership of 144,530 Bitcoin, constituting nearly 0.7% of the circulating supply as of December 6, which amounts to approximately 19.56 million BTC.

The company’s substantial crypto holdings have propelled its share price to a remarkable 275% surge in 2023, mirroring the upward trajectory of BTC.

What’s noteworthy is the correlation between MicroStrategy’s stock market performance and the dynamics of the crypto market throughout the year. Notably, the company’s stock witnessed a significant upswing since mid-October, aligning closely with the bullish momentum of Bitcoin during that period.

As of the end of November, MicroStrategy’s Bitcoin holdings soared to a value exceeding $7.2 billion, a staggering $2 billion increase from its initial investment.

This substantial growth solidifies the company’s standing as the world’s leading BTC whale and appears to affirm Saylor’s unwavering bullish stance.

How Will MSTR Stock React To BTC ETF Approval?

MicroStrategy Inc.’s strategic move of accumulating over $5.5 billion in Bitcoin since mid-2020 has transformed the once-struggling software company into a Bitcoin proxy for equity investors.

This transformation has led to a tripling of MicroStrategy’s shares as Bitcoin’s value surged, outperforming the S&P 500 Index, which gained about 40% during the same period.

Now, with the U.S. Securities and Exchange Commission (SEC) potentially approving ETFs directly investing in Bitcoin, questions arise about the sustainability of MicroStrategy’s premium valuation.

The SEC’s favorable stance follows a key court loss earlier this year, sparking debates among investors and analysts on the future trajectory of MicroStrategy’s shares.

The company itself has raised concerns in a recent filing, acknowledging the possibility of a decline if its stock is perceived as an alternative to Bitcoin investment vehicle.

In an August 1 filing , MicroStrategy stated: “To the extent that our Class A common stock is viewed as an alternative-to-Bitcoin investment vehicle and trades at a premium to the value of our Bitcoin holdings, that premium may also be eliminated, causing the price of our Class A common stock to decline.”

Saylor initiated Bitcoin purchases in 2020, driven by the need to reduce cash holdings amidst the perceived threat of inflation, especially as revenue from the software business stagnated. Despite giving up his CEO title last year, Saylor continues to focus on the Bitcoin aspect of the company’s dual strategy.

Rollercoaster After SEC’s Approval?

TD Cowen analyst Lance Vitanza estimates that MicroStrategy’s shares currently command a premium of about 30% over the enterprise value due to its substantial Bitcoin holdings. However, he anticipates a potential reduction to 15-25% if the SEC approves Bitcoin ETFs in the coming months.

Vitanza, who holds an ‘outperform’ rating on MicroStrategy, remains optimistic, suggesting that the approval of ETFs could trigger a Bitcoin rally, offsetting the reduction in the premium by boosting share prices. He highlights MicroStrategy’s appeal due to its underlying software business and its ability to borrow against Bitcoin holdings for further investments.

MSTR target price to 2024
MSTR target price to 2024

He said: “The creation of a spot ETF will trigger several tens of billions of dollars to be invested into Bitcoin.

“We think that yes, the premium embedded into MicroStrategy stock will go down, but it will be more than offset by the increase in the price of Bitcoin.”

As MicroStrategy prepares to report third-quarter results, analysts anticipate  revenue of $125.8 million and an EBITDA of $25.3 million, reflecting a consistent performance compared to the year-ago period.

Is MicroStrategy Profitable?

MicroStrategy has successfully returned to profitability in the second quarter. This turnaround follows a significant writedown a year earlier, prompted by a sharp decline in the value of the cryptocurrency.

The Tysons Corner, Virginia-based company reported a net income of $22.2 million, equivalent to $1.54 per share, in stark contrast to the previous year’s loss of over $1 billion, or $94 per share.

Despite this positive development, MicroStrategy fell short of Wall Street’s revenue estimates, with sales declining by 1.4% to $120.4 million, while analysts expected $123.2 million. The firm attributed part of this to digital asset impairment losses totaling $24.1 million.

MicroStrategy Q2 balance sheet
MicroStrategy Q2 balance sheet

While MicroStrategy’s operations remain in the red, reflecting a quarterly operating loss of $26.7 million, the company holds over $700 million in deferred tax benefits from prior writedowns related to its Bitcoin holdings. With the recovery of Bitcoin’s value, the company has lifted a valuation allowance against these tax assets.

MSTR In 2024

According  to 12-month price forecasts from a panel of four analysts for MicroStrategy, the median target stands at $562.50, encompassing a high estimate of $670.00 and a low estimate of $510.00. This median forecast suggests a modest 2.6% decrease from the most recent closing price of $577.68.

As for a consensus , the recommendation for MicroStrategy stock remains steadfastly positive, with a unanimous buy rating. This assessment has remained unchanged since November, signaling a sustained endorsement of the company’s investment outlook.

Berenberg Capital analysts emerged with bullish forecasts for the future of MicroStrategy shares, especially because of the upcoming halving of Bitcoin, the main asset in the company’s balance sheets.

In particular, the fourth halving of Bitcoin, which will halve the miners’ rewards to 3,125 BTC per block mined, could push the price of the cryptocurrency towards new price horizons, positively impacting MicroStrategy’s profits.

Anlysts view on MSTR
Analysts view on MSTR

Vitanza said: “If we broaden our horizons we can well understand that if Bitcoin were to exceed the recent ATH at $69,000 in the next bull run, then MSTR could easily return to $1,300, which would mean an increase of approximately 320% compared to current values.”

The performance of MicroStrategy’s shares reflects in a very familiar way the movements of the first cryptocurrency by market capitalization precisely because the majority of the company’s balance sheets regard BTC.

What Will MSTR Price Be In the Next Five Years?

It’s difficult to predict what MSTR price will be in five years especially because the stock performance is tied to Bitcoin‘s one. And we know how unpredictable cryptocurrencies are.

Anyway, there are a number of factors that could affect MSTR’s stock price in the next five years. These include:

The Price Of Bitcoin

The price of Bitcoin is the most important factor that will affect MSTR’s stock price. If Bitcoin prices continue to rise, MSTR’s stock price is likely to rise as well. However, if Bitcoin prices fall, MSTR’s stock price is likely to fall as well.

MicroStrategy’s Ability To Execute Its Business Strategy

MicroStrategy is not just a Bitcoin investment company. It is also a business intelligence company. If MicroStrategy is able to grow its business intelligence business, this could help to offset any declines in the price of Bitcoin.

MSTR stock price prediction to 2030
MSTR stock price prediction to 2030

The Overall Cryptocurrency Market

The cryptocurrency market is still in its early stages of development. As the market matures, it is possible that Bitcoin and other cryptocurrencies will become more widely adopted. This could lead to a sustained increase in the price of Bitcoin, which would benefit MSTR’s stock price.

Regulatory Changes

Governments around the world are still grappling with how to regulate cryptocurrencies. If governments implement regulations that make it more difficult to buy, sell, or hold cryptocurrencies, this could hurt the price of Bitcoin and MSTR’s stock price.

The majority of analysts predict the price of MSTR could rise to $1,37,60 in 2028, showing a 139% increase from the current value. The stock may also hit a record of $1,954.49 in the first year of the next decade. But it all depends on Bitcoin.

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