MicroStrategy’s aggressive acquisition of Bitcoin (BTC) has been a significant factor in the strong performance of its stock, according to a report from analysts shared with Cointelegraph on September 24. The report suggests that the company should explore generating returns by lending out part of its Bitcoin reserves.
Benchmark fintech analyst Mark Palmer estimates that MicroStrategy’s stock, MSTR, could reach a value of $215 per share if the firm continues to utilize its balance sheet for additional BTC purchases and begins to lend out the cryptocurrency for low-risk returns. Currently, MSTR shares are trading around $153 following a 10-for-1 stock split on August 9. While MicroStrategy’s primary business revolves around enterprise software, its market valuation is largely driven by its Bitcoin holdings, which started accumulating in 2020.
In a podcast on September 18, Executive Chairman Michael Saylor remarked that Bitcoin could evolve into an ideal form of “perfected capital,” serving both as a store of value and a source of low-risk yield through digital banking options like lending and borrowing.
MicroStrategy’s core business revenues have shown a decline compared to the previous year. Source: MicroStrategy
Despite concerns from investors regarding MSTR’s valuation—where the stock trades at a premium compared to its Bitcoin assets—Saylor contends that the positive momentum from its Bitcoin acquisition strategy supports this premium, viewing it as an inherent advantage rather than a drawback.
During the earnings call on August 1, MicroStrategy reaffirmed its commitment to Bitcoin acquisitions by introducing a novel performance metric: Bitcoin yield. This metric evaluates the ratio of BTC holdings against outstanding shares, effectively positioning Bitcoin per share as a benchmark for corporate performance.
In an analyst note dated August 2, Palmer explained that this approach aims to “illustrate the effectiveness of its Bitcoin acquisition strategy and its use of prudent leverage.”
On September 20, MicroStrategy completed a $1.01 billion convertible note offering, dedicating the proceeds to Bitcoin purchases and debt reduction.
MicroStrategy utilizes “Bitcoin Yield” as a benchmark for its performance. Source: MicroStrategy
Palmer informed Cointelegraph via email that part of the funds from the latest convertible bond offering was used to pay off $500 million in 6.125% senior secured notes due in 2028. He emphasized that this creates new opportunities for MicroStrategy, especially as institutional cryptocurrency custodians are increasingly emerging in the U.S. and institutional interest in crypto as an asset class is on the rise.
“With the SEC showing greater flexibility regarding digital assets and major institutions expressing newfound interest in the crypto market, it seems likely that the company will soon have access to significant institutional counterparts for lending a portion of its Bitcoin, with a high degree of certainty that these loans will be repaid,” Palmer noted in his September 24 report.
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