MicroStrategy’s all-consuming love for Bitcoin no longer seems to be a drag on its good financial health, at least according to the bullish forecasts of licensed analysts, who are betting on a surge in the MSTR share price.
Long appalled by MicroStrategy’s maximalist bitcoin strategy, financial analysts, at least some of them, now seem conquered by the policy of buying drumbeats led by Michael Saylor since the summer of 2020. A few hours before the quarterly publication of the company’s results, optimism is in order with bullish price targets for MSTR stock.
An Innovative Strategy that Would Pay Off
The company with 152,333 BTC in cash is no longer scary, according to the experts of two investment banks who today applaud the strategic shift taken by MicroStrategy in the summer of 2020. On this date, Michael Saylor, co-founder and then CEO of the software company, began a policy of buying bitcoins to compensate for the devaluation of the dollar. His conviction: to favor digital gold at the expense of a melting currency to maintain, if not increase, his firm’s cash flow.
Unlike other rare companies, such as Tesla, which was satisfied with a purchase, for $1.5 billion all the same, of which it quickly sold part to keep only some $184 million in bitcoins, MicroStrategy continued its acquisitions at a steady pace until very recently, dropping a few bitcoins just in passing for tax reasons.
This accumulation strategy, often deemed foolish by many observers, now seems to be paying off. The company’s stock has risen more than 200% since the start of the year, rising from $139.38 to $475.09 according to data from Boursorama.
Moreover, it may well continue to climb. Indeed, TD Cowen analyst Lance Vitanza is looking at a price of $520 for the end of the year, while his German counterpart at Berenberg Bank is setting a slightly lower target of $510 at distance, however, from the $811 of November 8, 2021, when Bitcoin touched $70,000.
Reasons for a Positive Perception of MicroStrategy’s BTC Purchase Policy
The question is to know what this reversal is due to, far from the catastrophic year 2022 when, correlatively to the fall in the price of bitcoin, the MSTR share had largely depreciated following the devaluation of its BTC portfolio. This had not been without consequence, probably leading to the resignation of Michael Saylor, the head of the company, appointed in the process executive chairman of the company’s investment committee.
The change in management did not lead to any modification in the acquisition strategy of MicroStrategy, though, which continued its purchases in BTC, in particular by resorting to the issue and sale of shares and bonds to constantly acquire more of its favorite asset.
In a note to investors relayed by Bitcoin Magazine, he discusses the effectiveness of a “hybrid business strategy” which consists of converting excess income from the core business of software intelligence into bitcoins. A bold choice that, according to the analyst, represents a serious “paradigm shift”.
“This is not a short-term trading strategy, but rather reflects the belief that ultimately bitcoin will prove to be a superior store of value compared to metals and fiat currencies,” Vitanza explained.
This is a perspective that leads him to claim that MicroStrategy is “an attractive vehicle for investors seeking exposure to bitcoin,” an idea of which some are already largely convinced, investing in the shares of the company as if they were buying shares of a Bitcoin ETF.
By Audy Castaneda
