MicroStrategy's bold investment approach to Bitcoin could send its shares soaring 64%, according to Bernstein analysts.
The business intelligence software company, led by its founder Michael Saylor, has adopted a bold investment strategy based on Bitcoin, the market-leading cryptocurrency, which could lead to a significant increase in the value of its shares.
According to a recent report from Bernstein analysts, Saylor’s company’s stock is projected to experience a 64% increase, reaching a target price of $290 per share, thanks to its focus on the relentless accumulation of Bitcoin.
MicroStrategy's bet on Bitcoin
Since August 2020, MicroStrategy has been accumulating Bitcoin through a number of diversified strategies, such as converting its excess cash into BTC and selling convertible senior notes. The company currently holds a total of 252.220 bitcoins, which are valued at approximately $16.000 billion, as of press time.
Both Saylor and other market experts have noted that this focus on Bitcoin accumulation has proven successful for the company, as since it adopted this strategy and began accumulating Bitcoin, the value of its MSTR shares has increased by about thirteen times, outperforming Bitcoin, gold, and other benchmarks such as the S&P 500 and the Nasdaq.
Recently, Bernstein analysts Gautam Chhugani, Mahika Sabra and Sanskar Chindalia also praised MicroStrategy's aggressive Bitcoin investment strategy, highlighting that Saylor has turned his company into a Pioneer of a Bitcoin-based treasury model for businesses.
Bitcoin boosts MicroStrategy and its stock growth
According to the report published by Bernstein analysts, visa According to DLNews, MicroStrategy’s relentless Bitcoin stacking has pushed the company’s market cap to over $35.000 billion and put it in a competitive position, on par with the select group of companies that make up the S&P 500.
Although MicroStrategy is not included in this stock index, analysts indicated that Saylor's company competes “shoulder to shoulder” with many of the companies that are part of it.
Based on their projections, Bernstein analysts assumed that the Bitcoin price could reach a value of $1.000.000 by 2033. This optimistic forecast aligns with the bullish trend that the leading cryptocurrency has shown since its launch. The BTC price has experienced a 50% rally so far this year. Therefore, despite the stagnation observed in the summer, the firm's analysts believe that several factors, such as the growing adoption of Bitcoin exchange-traded funds by large financial institutions and a more favorable political environment towards cryptocurrencies, could further boost the price of Bitcoin in the market.
Source: CoinMarketCap
The risks of this new model of investment in cryptoassets
Analysts also noted that MicroStrategy's strategy is based on the belief that Bitcoin will continue to appreciate against the dollar over the long term. However, while the inclusion of Bitcoin on MicroStrategy's balance sheet may increase the volatility of its stock, analysts also said that this has allowed the company to access convertible debt on attractive terms.
In relation to the above, Bernstein estimated that MicroStrategy has an outstanding debt of approximately $4.000 billion, with an average interest cost of around 1% and a conversion premium of between 30% and 40%. Therefore, although MicroStrategy's investment strategy in Bitcoin has proven to be effective for the company and the value of its shares, it is not without risks, especially if the price of the leading cryptocurrency stagnates.
But beyond the potential risks, Bernstein analysts said that optimism surrounding MicroStrategy's Bitcoin strategy remains strong. So far, Michael Saylor's company has demonstrated a remarkable ability to adapt and capitalize on opportunities in the Bitcoin and cryptocurrency market, to the point of positioning itself as a leader in this new paradigm. Therefore, the analysts indicated that, thanks to its strategic approach, MicroStrategy could serve as a model for other companies looking to diversify their treasury assets.
The combination of Saylor’s experience in the business arena and his long-term vision for Bitcoin has put MicroStrategy at the center of the conversation about the future of cryptocurrencies. Bernstein’s prediction of a 64% increase in its stock price is a testament to the potential that companies can experience by incorporating Bitcoin into their corporate balance sheets and that MicroStrategy will continue its recurring purchases of the cryptocurrency.
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