MicroStrategy (NASDAQ: MSTR), a business intelligence firm turned Bitcoin (BTC) powerhouse, has once again grabbed headlines with its largest-ever Bitcoin acquisition to date.
The company revealed in a filing on November 25 that it had purchased 55,000 Bitcoin between November 18 and 24 for $5.4 billion.
This latest acquisition brings its total Bitcoin holdings to an eye-popping 386,700 BTC. Acquired at an average price of $56,761 per coin, the firm’s total Bitcoin investments now amount to $21.9 billion.
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Known as a proxy for Bitcoin, MicroStrategy’s bold strategy of leveraging equity and debt offerings to fund its acquisitions has impressed analysts, leading to significant upward revisions of its stock price targets.
With Bitcoin trading near $100,000, many believe this approach could unlock substantial shareholder value, positioning MSTR stock as a prime option for investors seeking exposure to the cryptocurrency market.
Analysts are optimistic amid massive Bitcoin holdings
MicroStrategy’s recent Bitcoin purchase and its Bitcoin treasury model have led to a flurry of revised price targets from leading Wall Street firms.
Bernstein analyst Gautam Chhugani raised his target to $600 from $290, describing the company’s strategy as unprecedented on Wall Street. In the firm’s view, MicroStrategy is on an “insatiable path” to attract billions in global capital to invest in Bitcoin.
The firm expects MicroStrategy to hold 4% of the global Bitcoin supply within the next decade, driven by its relentless capital-raising and acquisition efforts.
Similarly, Benchmark analyst Mark Palmer raised his price target to $650 from $450. Palmer noted that MicroStrategy’s stock surge, fueled by renewed Bitcoin optimism following Donald Trump’s election victory, has raised questions about its high valuation.
The stock’s premium is nearly three times the market value of its Bitcoin holdings. Analysts lauded MicroStrategy’s ability to create shareholder value through its repeated fundraising activities, which balance equity dilution with substantial Bitcoin accumulation.
“We believe those who raise such criticisms are giving short shrift to the shareholder value [MicroStrategy] has been creating through its treasury operations, i.e., it’s repeated tapping of the capital markets to raise proceeds to fuel the addition of bitcoins to its sizable holdings.”- Mark Palmer
More cautious but still optimistic analysts
Barclays followed suit, raising its target to $515 from $275 while maintaining an Overweight rating.
TD Cowen raised its price target to $525, noting the successful issuance of $3 billion in convertible bonds and $2.46 billion in equity under its at-the-market (ATM) program. Analysts projected MicroStrategy’s Bitcoin holdings could be worth $108 billion by the end of FY27.
Canaccord analyst Joseph Vafi also raised his price target for MicroStrategy (MSTR) to $510 from $300, maintaining a Buy rating. Analysts introduced a new valuation framework, noting that traditional earnings metrics no longer apply, as the software business now contributes minimally to its enterprise value.
Instead, the company leverages equity and convertible debt, enabling Bitcoin holdings to grow faster than share dilution. Since adopting its Bitcoin strategy in 2020, MicroStrategy has seen a staggering 2,800% increase in its stock price, making it the best-performing stock across the Fortune 500 in that period.
Volatility remains a key consideration
Despite the optimism, analysts acknowledge the risks associated with MicroStrategy’s strategy. The company’s stock remains highly correlated with Bitcoin’s price movements, exposing it to significant volatility.
MSTR stock surged 24% last week as Bitcoin trended higher but reversed sharply following a peak of $543. Shares closed at $403.35 on November 25, reflecting a 488% gain year-to-date.
MicroStrategy’s focus on Bitcoin has also attracted skepticism. Critics argue that investors could gain direct exposure to Bitcoin through exchange-traded funds (ETFs) rather than paying a premium for MSTR stock.
Citron Research, for instance, has taken a short position on the stock, highlighting concerns over its valuation relative to its Bitcoin holdings.
Despite the risks, analysts remain bullish on MicroStrategy’s long-term potential. With Executive Chairman Michael Saylor predicting Bitcoin could reach $13 million by 2045, the company’s Bitcoin holdings could eventually be worth trillions.
As the company builds what some analysts call the first “Bitcoin bank,” its stock remains a compelling, albeit volatile, investment for those betting on the future of cryptocurrency.
Featured image via Shutterstock
