6,220 Reasons to Buy MicroStrategy Stock This Week

Bitcoin Cyber Green Data Background by LumerB via iStock The first public Bitcoin (BTCUSD) treasury business MicroStrategy (MSTR) is back in the news again after buying 6,220 more BTC for nearly $740 million between July 14 and July 20. The acquisitions have increased its Bitcoin reserves up to a staggering 607,770 BTC and place the company even further ahead as the top corporate Bitcoin holder.

The latest comes hot on the heels of President Donald Trump’s signing of the Genius Act, which has rekindled the crypto world by offering regulatory and legal clarity on digital assets, with specific focus on stablecoins. Institutional interest has reared up again too with Bitcoin back above the level of $119,000. MSTR’s aggressive Bitcoin accumulation and capital raise model once again places the stock as one of the most volatile but compelling bets among crypto-related equities.

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About MicroStrategy Stock

MicroStrategy (MSTR) is a Virginia company offering business intelligence software and enterprise analytics that transformed to become the first corporate Bitcoin treasury company. It now has a central strategy encompassing the purchasing and holding of Bitcoin. MicroStrategy’s current market capitalization is approximately $112.8 billion.

MSTR stock has experienced wild fluctuations in the last 52 weeks from a low at $102.40 to a high at $543.

Despite this volatility, shares are up nearly 150% in the past year and nearly 45% in the year to date, dramatically outperforming the S&P 500 Index ($SPX) in each period. It has also performed Bitcoin during these periods, with the cryptocurrency up 80% and 27%, respectively.

From a valuation standpoint, MicroStrategy is an unusual one. The stock carries a price-earnings ratio of 58.4x and an eye-popping price-sales ratio of 251.47x. With thin normalized earnings and more than a $1.1 billion net loss in the previous year, MSTR is little more than a leveraged Bitcoin proxy.

MicroStrategy Beats on Bitcoin Gains

The most recent quarter by MicroStrategy carried the signatures of its characteristic business model. Even though revenue declined moderately year over year to $111.1 million, the Bitcoin metrics of the company ran the show. The business incurred a massive fair value loss of $5.9 billion in response to accounting principles at the end of Q1 when the price of BTC was $82,445. However, with the price of Bitcoin now near $120,000, the company is anticipating a significant fair value gain in Q2.

Story ContinuesThe company plans to report its Q2 results on July 31. Investors anticipate its release will reveal huge unrealized gains and possibly a record quarter given the timing at the end of Bitcoin’s rally.

What Do Analysts Expect for MicroStrategy Stock?

Despite MicroStrategy’s radical business model, analyst sentiment remains optimistic. MSTR has a “Strong Buy” consensus rating.

The consensus target price for MSTR is $543.62, translating into a 30% potential return from current prices. Bullish analysts have targets as high as $680, while the most negative target stands at $200, which shows the large range of sentiment created by exposure to Bitcoin.

 *On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com* 

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