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MicroStrategy (MSTR) was founded as a business intelligence company that develops analytics tools and software to aid in business decision-making. Its products include MicroStrategy AI and MicroStrategy ONE. However, investors likely associate the company with its strategic move to buy up Bitcoin (BTCUSD).
MSTR stock was one of the standout performers of 2024, gaining more than 400% and continuing that momentum into 2025 with nearly 25% gains in the year-to-date.
Investors should note that its stock rally and $86 billion valuation have little to do with its core business of AI and software, but rather its Bitcoin reserve. The company invested heavily in the cryptocurrency and now owns more than 450,000 BTC, which it acquired at an average purchase price of $62,473.01. Its total holdings are currently worth more than $27 million.
One reason investors are so keen on its corporate BTC holdings is that the cryptocurrency is likely to get a boost from President-elect Donald Trump. As the largest corporate holder of the crypto, MicroStrategy is well-positioned to benefit.
Analysts Upgrade MSTR
Wall Street firm Cantor Fitzgerald has upgraded its MicroStrategy price target from $518 to $613, reflecting 70% potential upside from current prices. Analyst Brett Knoblauch has an “Overweight” rating on the stock.
Knoblauch pointed out that MicroStrategy has developed a capital market strategy that allows it to add Bitcoin on a per-share basis. The company has raised $18 billion of capital in the last 2 months as it took advantage of Bitcoin’s surge following Donald Trump’s re-election.
MicroStrategy has been operating with a 21/21 strategy, essentially meaning that it plans to raise $21 billion through debt and $21 billion through equity to fund further Bitcoin acquisitions.
Cantor Fitzgerald said that based on its recent activity, it still has $6.7 billion of equity, $2 billion of preferred stock, and $18 billion of debt to work with. At current prices this translates to an additional 287,00 Bitcoin. Knoblauch also expects that MicroStrategy will deliver a 10% BTC yield again in 2025 and more than $4 billion profit from its treasury operation.
MicroStrategy’s Third-Quarter Results
MicroStrategy posted its third-quarter results on Oct. 30, 2024. The company reported a loss of $340.2 million, translating to a loss of $1.72 per share. Its revenue for the quarter dipped 10.3% year-over-year to $116.1 million, missing estimates of $121.5 million.
The company’s gross margin was 70.4%, down from last year’s 79.4%. As of Sept. 30, 2024, its cash balance was $46.3 billion, a slight $0.5 million dip from Dec. 31, 2023.
Analyst Ratings on MSTR
Despite its stellar performance in 2024, few analysts cover MSTR stock. The company has a unanimous “Strong Buy” rating from eight analysts and a mean price target of $561, signifying upside potential of 55% from the current price near $359.
