MicroStrategy’s (NASDAQ:MSTR) bitcoin premium, which refers to the added value its stock holds due to its significant bitcoin holdings, has raised plenty of eyebrows.
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Critics may have their reservations, but the results speak for themselves. This strategy has undeniably benefited shareholders. By leveraging the premium to acquire additional bitcoin, the company has generated about $10 billion in shareholder value in 4Q24 alone. Even with an increase in the number of shares issued, the bitcoin per share (on a fully diluted basis) surged by 43% during the quarter.
Meanwhile, MicroStrategy is showing no indication it is about to take its foot off the gas right now with its BTC purchasing activity. Between December 2 and December 8, the Michael Saylor-led firm raised $2.13 billion by selling new shares under its recently launched $21 billion ATM equity facility, leaving $9.19 billion in remaining capacity. This move follows the company’s announcement of an ambitious plan to raise $42 billion in capital by the end of FY27.
Looking at all of this taking place, TD Cowen analyst Lance Vitanza, who ranks amongst the top 2% of Wall Street stock pros, notes that while the raise target initially seemed aggressive, the company has already raised around $13 billion in common equity since Halloween (alongside an upsized $3 billion convertible notes offering), and that makes its goal seem “increasingly conservative.” Given this momentum, Vitanza now projects the company will raise over $52 billion in capital from the announcement date through FY27.
This is also an indication that its moves are increasingly being viewed as credible. “MicroStrategy’s ability to tap the capital markets in size reflects in our view that despite pockets of institutional skepticism, the market overall has accepted the company’s announced strategy to acquire and hold bitcoin – and to use its balance sheet to do so on terms that are clearly and demonstrably accretive to existing shareholders,” Vitanza went on to say.
Year-to-date, the company has achieved a 68.7% BTC yield, effectively generating 129,981 bitcoins at “zero incremental cost to shareholders.”
All of this activity has caused Vitanza to revise his MSTR model. By the end of FY27, the analyst now sees MicroStrategy holding 678,000 bitcoins (up from the prior estimate of 641,000), amounting to 3.2% of the total bitcoin supply—a “conservative estimate,” based on $36 billion of additional capital deployed through an expanded 21/21 plan. Additionally, the 5-star analyst estimates bitcoin will average ~$185,000 per coin in FY27 (up from the previous forecast of $165,000). “Thus,” says Vitanza, “we model MSTR with over $125 billion of intrinsic bitcoin value (vs. $107 billion prior) by the end of FY27 – a 48% CAGR vs. today.”
Bottom line, Vitanza rates MSTR shares as a Buy, while raising his price target from $525 to $550. This target puts the upside potential at a ~46%. (To watch Vitanza’s track record, click here)
It’s Buys only from Vitanza’s colleagues, too – 8, in total – naturally making the consensus view here a Strong Buy. Going by the $497.13 average price target, a year from now, shares will be changing hands for a ~32% premium. (See MSTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
