Within the volatile tides of the crypto market, MicroStrategy (MSTR), a software intelligence business under the stewardship of Michael Saylor, shines its own unique beacon. The piquing factor for MSTR’s climb aboard the bullish bandwagon by industry observers is its particular business strategy involving the mighty Bitcoin. The company astoundingly transitions all its earnings from its core activities into Bitcoin. Analyst Lance Vitanza from TD Cowen, who endorsed an outperform rating on MSTR, perceives this approach as a “paradigm shift.”
The company’s confidence in Bitcoin goes beyond inculcating a mere short-term trading strategy. This bold perception is anchored in the belief that Bitcoin will ultimately surmount its metallic and fiat counterparts to become a superior store of value. MSTR’s strategy seems to be panning out well, with the company’s shares soaring by 207% this year. The firm is currently trading around $435, encouraged by a proposed year-end price target of $520 by TD Cowen.
As for MSTR’s Bitcoin balance, as of July 28, the company reportedly owned approximately 152,333 bitcoins, roughly equating to a whopping $4.5 billion. These holdings include the most recent acquisition of 12,333 bitcoins for $347 million in cash. Simultaneously, Bitcoin has swelled by around 77% in trading value since the beginning of the year, consolidating MSTR’s faith in the digital asset.
There’s something to glance at with a fair bit of skepticism too. Owing to BTC’s remarkable rally, MSTR’s balance sheet has displayed a considerably lessened impairment loss on its digital assets, plunging steeply from the fourth quarter’s $197.6 million down to merely $18.9 million in the following quarter. An anticipatory eye now rests on their upcoming earnings report, with TD Cowen projecting a revenue of $127.9 million, indicating a 5% rise from the previous quarter.
Another noteworthy factor is German investment bank Berenberg also mirroring a vote of confidence in MSTR. Analyst Mark Palmer cites the company’s rapid pace of Bitcoin acquisition coupled with his own resurgent optimism in Bitcoin’s institutional adoption as reasons for upping its price target for MSTR to $510.
MSTR’s unique undertaking in Bitcoin revels in a considerable amount of goodwill from analysts. Still, hiding under the radar is the omnipresent unpredictability and fluctuating sentiment in cryptocurrency markets. The upcoming earnings report will prove enlightening for observers and investors alike about how this ‘Bitcoin-centric’ strategy weathers the storm. It might just set the precedent for a new paradigm in corporate strategies moving forward.
Source: Coindesk
