MicroStrategy shares turned lower in early Monday trading as bitcoin prices continue to test the $100,000 mark and a pair of Wall Street analysts boosted their price targets on the world's biggest holder of the world's biggest cryptocurrency.
MicroStrategy shares (MSTR) have soared more than 500% so far this year, adding more than $75 billion in market value, as CEO Michael Saylor executed a series of capital raising efforts designed to add to the group's bitcoin holdings.
Bitcoin prices, which have had an enormous comeback this year in the wake of the FTX platform collapse and the Securities and Exchange Commission's approval of a spot exchange-traded fund in early January, are up 133% and have come within a whisker of breaching $100,000.
MicroStrategy, in fact, said in an SEC filing Monday that it purchased 55,000 bitcoin last week at just under $98,000.
MicroStrategy has acquired 55,500 BTC for ~$5.4 billion at ~$97,862 per #bitcoin and has achieved BTC Yield of 35.2% QTD and 59.3% YTD. As of 11/24/2024, we hodl 386,700 $BTC acquired for ~$21.9 billion at ~$56,761 per bitcoin. $MSTR https://t.co/79ExzXk4UM
— Michael Saylor⚡️ (@saylor) November 25, 2024
"Twenty Twenty-four has been a great year," Saylor told investors last month. "The launch of the ETFs at the beginning of the year was a major milestone. The embrace of bitcoin by major political parties is a second milestone. I think we can see movement toward normalization of bitcoin."
"If you've been following our journey, you know that our thesis was bitcoin is like the Facebook of money or the Google of money," he added. "It is the dominant digital monetary network. It's a network that everybody in the world needs, nobody in the world can stop, and most conventional investors don't understand."
Image source: Twitter.
Many investors see further gains ahead for the world's benchmark cryptocurrency as President-elect Donald Trump has vowed to make the U.S. the "crypto capital of the planet" and create a government-backed fund that some see as a mechanism to ultimately pay down the national debt.
MSTR bitcoin model 'unprecedented'
SEC Chairman Gary Gensler, seen as a headwind to the crypto industry's financial market ambitions, also has said he will step down in January.
Bernstein analyst Gautam Chhugani, who boosted his price target on MicroStrategy by $310 to $600 a share in a note published Monday, sees the group as a principal beneficiary.
Chhugani estimates MicroStrategy owns around 1.7% of global bitcoin and says could grow to 4% over the next decade in his base-case scenario.
“MicroStrategy’s bitcoin treasury model is unprecedented on Wall Street ... a company on an insatiable path to attract billions in global capital to invest in bitcoin,” he wrote.
Related: Bitcoin could reach $420,000 by 2030, crypto bull says
Some investors, however, worry that MicroStrategy's effort to acquire bitcoin, which includes both equity and convertible-debt offerings, will dilute current investors and add longer-term pressure to the share price.
Citron Research, a well-established short-seller on Wall Street, said last week it was betting against the group, arguing that the stock was "overheated" and “completely detached from bitcoin fundamentals."
Canaccord Genuity analyst Joe Vafi sees it differently.
In a note published Monday, which raised his price target price by $210 to $510 a share, Vafi said MicroStrategy could grow its bitcoin holdings faster than its share count was diluted.
Bitcoin yield is in Canaccord focus
Vafi noted that MicroStrategy reported on Nov. 18 that its year-to-date bitcoin yield, a measure that tracks the number of added bitcoin per company share, increased 41.8%.
"Doubling bitcoin per share is attractive, but when combined with gains in the spot price of bitcoin, it creates substantial 'dollarized' accretion per share that does not appear on the" profit-and-loss statement, Vafi said.
Related: Bitcoin and Black Friday will rock markets this week
"This dollarized bitcoin accretion captures all elements of MicroStrategy's strategy, including the equity premium, bitcoin spot price, accretive equity/debt purchases, and bitcoin yield [key performance indicators,]" he added.
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MicroStrategy shares were marked 1.8% lower in early Monday trading to changes hands at $413.98 each. Bitcoin was trading at $95,791.50 each.
Short interest in the group remains notable, however, with data from S3 Partners indicating bets against the group amounted to around 15% of the stock's float.
That said, short-sellers, who bet on stocks declining in price in the hope of repurchasing them at lower levels, are down $12 billion on paper this year.
Related: Veteran fund manager sees world of pain coming for stocks
