Benchmark has raised its price target for MicroStrategy stock price (MSTR) from $215 to $245, highlighting the company’s ability to generate value from its bitcoin holdings and its core software business.
Analyst Mark Palmer noted that the market is not fully recognizing MicroStrategy’s potential because of its innovative approach. The company uses “intelligent leverage” to generate higher returns on its Bitcoin holdings, which sets it apart from other ways of investing in Bitcoin. This differentiates MicroStrategy from other options for gaining exposure to bitcoin, such as spot bitcoin ETFs.
Despite concerns from some investors about the stock trading at a premium of 2.4 times the value of its bitcoin holdings, Benchmark believes that MicroStrategy’s business model justifies this valuation.
Currently, MicroStrategy’s market capitalization exceeds $41 billion, while its bitcoin holdings are valued at around $17 billion. This creates a net asset value (NAV) premium that recently reached a new high of 2.5 times its bitcoin assets.
By September 19, MicroStrategy’s Bitcoin Yield, a measure introduced by Executive Chairman Michael Saylor, reached 17.8%. This shows how well the company’s bitcoin investment strategy is working, especially compared to lower yields of 1.8% in 2022 and 7.3% in 2023.
Following the bullish report, MicroStrategy shares saw a 6.6% increase on Friday, reaching $206.19. This rise was also supported by the price of Bitcoin climbing to $68,400, nearing a three-month high.
Benchmark’s analysis reinforces the idea that investing in MicroStrategy stock offers a compelling alternative to directly holding Bitcoin or utilizing spot ETFs, due to the company’s unique value proposition in the cryptocurrency space.
Also Read: MicroStrategy’s Bitcoin Strategy Could Outdo FTX’s Harm: Lingham
