Valued at a market cap of $80.7 billion, MicroStrategy (MSTR) provides enterprise software solutions. However, the tech company is also the largest institutional holder of Bitcoin (BTCUSD), which means the performance of MSTR stock is tied to BTC prices.
MicroStrategy began accumulating Bitcoin on its balance sheet back in June 2020. Today, it owns 471,000 BTC worth over $45 billion. After an aggressive buying spree that saw MicroStrategy amass its Bitcoin holdings, the software company hit the pause button, surprising Wall Street. Let’s see what this means for MSTR stock.
MicroStrategy Just Rebranded Itself
MicroStrategy announced its fourth-quarter results yesterday. During the earnings call, the company announced that it has changed its name to “Strategy.” This move simplifies the company’s brand, while the logo includes the “B,” which emphasizes its Bitcoin Treasury Strategy. Strategy’s press release stated, “This brand simplification is a natural evolution of the company, reflecting its focus and broad appeal.”
In 2024, MicroStrategy acquired 258,320 BTC at an average price of $85,447. Notably, it announced a significant accounting change: Strategy will shift to fair value accounting, resulting in a $12.75 billion positive adjustment in Q1 2025.
MicroStrategy’s Bitcoin bet exposes investors to the world’s largest digital asset. MSTR stock has returned over 2,000% to shareholders in the last five years, crushing broader market returns by a wide margin. In fact, MSTR has achieved annualized returns of 110% since adopting its Bitcoin strategy.
However, investors should also note that MSTR stock is quite volatile, while its debt-driven BTC acquisition strategy is risky. Over the years, MicroStrategy has raised capital several times by issuing debt and common stock to build its BTC position. MicroStrategy introduced a new “Strike” preferred stock, raising $584 million. It was also the largest convertible bond issuer in 2024. The company ended 2024 with $4.2 billion in long-term debt, up from $486 million in 2020. This approach could backfire if Bitcoin prices plummet or if interest rates move higher, both of which might force the company to liquidate its BTC holdings at unfavorable prices.
MSTR Stock Is a Leveraged Bitcoin Bet
MicroStrategy’s total sales are less than $500 million, showing that the company is a leveraged Bitcoin play. Today, MSTR stock is valued at 2x its BTC holdings. Recently, MicroStrategy unveiled an ambitious capital raising initiative dubbed the “21/21” Plan. Basically, it plans to raise $21 billion in equity and $21 billion in debt over the next three years to invest in Bitcoin. In Q1 2025, MicroStrategy plans to raise an additional $2 billion through public preferred stock offerings.
MicroStrategy remains an enticing investment for Bitcoin enthusiasts. Moreover, President Donald Trump is expected to provide a crypto-friendly environment, which could drive institutional adoption of this asset class.
Each of the 10 analysts covering MSTR stock has a “Strong Buy” recommendation. The average target price for MSTR stock is $556, over 50% above the current trading price.
