MicroStrategy (NASDAQ:MSTR), the software company turned Bitcoin powerhouse, appears to be the biggest stock market winner of 2024. Its shares have surged close to an astonishing 543% this year, fueled by the company’s bold decision to invest heavily in Bitcoin.
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With ownership of nearly 2% of the world’s Bitcoin supply, MSTR does quite well when the cryptocurrency appreciates. However, this relationship cuts both ways, sparking concerns about the company’s vulnerability if Bitcoin’s fortunes take a sharp downturn.
One investor known by the pseudonym HedgeMix is not too concerned about this bearish scenario transpiring.
“We are very bullish on the long-term potential for MicroStrategy and Bitcoin in general,” the investor opined.
HedgeMix offers several compelling reasons for optimism. Among these, the investor highlights the anticipated boost from the incoming Trump administration, which is reportedly considering establishing a U.S. strategic Bitcoin reserve. Additionally, pending U.S. Senate legislation aims to authorize the government to acquire 1 million Bitcoins over the next five years – a move that could significantly bolster Bitcoin’s value and, consequently, MicroStrategy’s fortunes.
When it comes to MicroStrategy, HedgeMix points to the company’s ability to raise capital through low-interest convertible bonds and then plow this money into Bitcoin. In practice, investors are providing super cheap financing for MicroStrategy to acquire more and more of the cryptocurrency in exchange for the possibility of turning these loans into future shares.
The investor also dismisses concerns that MicroStrategy’s 2.54x NAV premium is too high, arguing that “the company is essentially offering Bitcoin exposure as a regulated equity vehicle, something that institutional investors love.”
HedgeMix further explains that this premium is justified because MicroStrategy provides retail investors “a tax-advantaged way” to invest in Bitcoin via retirement accounts.
In fact, if Bitcoin continues to rise and MicroStrategy’s NAV remains steady, this could propel MSTR to share prices in the $1,000 range.
“There is more substance to the hype,” declares HedgeMix, who rates MSTR shares as a Buy. (To watch HedgeMix’s track record, click here)
No one is arguing with that take on Wall Street. The stock’s Strong Buy consensus rating is based on Buys only – 8, in total. The forecast calls for one-year gains of ~22%, considering the average price target stands at $494. (See MSTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
