It was the case, for quite some time, that enterprise analytics stock Microstrategy’s (NASDAQ:MSTR) share price had less to do with anything the company was doing and more to do with what it was holding. Its stock of Bitcoin (BTC-USD) made its fortunes somewhat easy to track, and today proved little different. Microstrategy was down over 8% in Tuesday afternoon’s trading, and that’s after a rally from earlier in the day, as Bitcoin took a major hit.
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Microstrategy is currently the largest corporate holder of Bitcoin, and that makes it rather closely tied to Bitcoin’s overall value. In fact, it took advantage of the latest dip in Bitcoin to pick up a hefty dollop more, adding 9,245 more Bitcoin to the coffers in a trade valued at around $623 million.
Where did Microstrategy get $623 million to buy Bitcoin? A combination of “convertible senior notes” and some excess cash. This isn’t even the only such purchase recently; last week, Microstrategy sold some debt and spent around $822 million on another 12,000 Bitcoins.
Microstrategy Holds Over 1% of All Bitcoin
If anyone else is unnerved by this development, rest assured you are not alone. When you, as a corporation, drop ten figures on cryptocurrency in the space of about a week, you wonder if there are other uses for this kind of cash. Indeed, thanks to these latest purchases, Microstrategy now holds a little over 1% of all Bitcoin that will ever be known to mankind.
However, with some convinced that both the equity market and the cryptocurrency market are overdue for a correction, this strategy of having a presence in both could backfire.
Is Microstrategy a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSTR stock based on four Buys assigned in the past three months, as indicated by the graphic below. After a 425.82% rally in its share price over the past year, the average MSTR price target of $1,383.33 per share implies 0.26% downside risk.
