MicroStrategy Stock Reaches Highest Price Since Start of Bitcoin Purchase Differential

Coin World News Report:
MicroStrategy’s stock price rose 6% to over $230 on Thursday, reaching a new high in nearly 25 years. This marks the sixth consecutive week of increase for MicroStrategy, the largest corporate shareholder in the world, in the context of the continuous rise of Bitcoin.
Less than two months ago, MicroStrategy’s stock price was $118, as Bitcoin was hovering around $56,000 on September 6, showing a downward trend. Since then, although the price of digital assets has risen by 20% to reach $67,600, MicroStrategy’s stock price has nearly doubled in comparison.
MicroStrategy has shed its label as an enterprise software company and positioned itself as a Bitcoin development company.
Earlier this month, MicroStrategy’s co-founder and CEO, Michael Saylor, stated that this effort involves becoming a “Bitcoin bank,” describing it as creating “Bitcoin capital market tools that encompass equities, convertible bonds, fixed income, and preferred stocks.” The company has also disclosed the creation of a decentralized identity protocol for Bitcoin.
The company’s treasury of 252,220 Bitcoins is currently valued at $17 billion, accounting for over 1% of the total Bitcoin supply. Since first including Bitcoin in its balance sheet in 2020, MicroStrategy’s game plan for acquiring Bitcoin has undergone significant changes.
MicroStrategy has been using equity and debt to acquire more Bitcoin than any other method. This year, it involved issuing convertible notes, which can be converted into stocks by the buyers, and issuing equity through a fundraising program.
According to asset management company Bernstein, which rates the company as “outperforming” in a report this week with a target price of $290, the company provides Bitcoin leverage exposure. Bernstein analysts wrote, “We believe investors should think of MicroStrategy as a positive leverage Bitcoin stock strategy. It actively switches between equity and long-dated convertible debt to provide Bitcoin leverage while maintaining a conservative leverage ratio.”
While spot Bitcoin ETFs have seen over $20 billion, MicroStrategy had already embraced Bitcoin before launching its own in January this year. Saylor recently stated that he sees the company as a bridge between traditional finance and digital assets, playing a crucial role.
He said, “If we didn’t exist, billions of dollars of capital from the traditional financial markets wouldn’t be invested in Bitcoin. The real MicroStrategy business is becoming a leading securities issuer to acquire Bitcoin.”
With the recent rebound in MicroStrategy’s stock price, the company’s valuation has increased relative to the Bitcoin it holds, reflected as a premium to its net asset value (NAV). As of Thursday, this premium reached 2.7 times, the highest level since February 2021, according to reports from the MSTR tracker.
Bernstein analysts wrote that MicroStrategy’s returns have been building a case for its premium, as its stock price has risen 426% in the past year. Among the factors driving MicroStrategy’s premium, the asset management company pointed out that it has proven its ability to increase the amount of Bitcoin per share and the limited number of comparable investment tools that provide leverage exposure.
Meanwhile, MicroStrategy also has some outspoken critics, including Bitcoin skeptics and economist Peter Schiff. On Tuesday, he argued on Twitter that MicroStrategy’s valuation and the advantages of its Bitcoin strategy would eventually reverse.
“MSTR is definitely the most overvalued stock in the MSCI World Index,” he wrote. “When it eventually collapses, that will be a real bloodbath.”
Editor: Andrew Hayward