MicroStrategy Inc. MSTR has become the epicenter of intense market speculation following a dramatic 23.64% stock decline over the past five sessions, while Bitcoin BTC/USD experienced a 5.52% drop during the same period.
What Happened: Prominent investment analyst Gary Black of The Future Fund LLC raised alarm bells about MicroStrategy’s valuation, arguing that the company’s stock price “makes no sense.” Black’s analysis suggests the stock should be valued at around $105 per share—approximately 75% lower than its current trading price.
“Don't say I didn't warn you,” Black wrote.
The company, led by CEO Michael Saylor, currently holds 386,700 Bitcoin, valued at $35.4 billion. With a market capitalization of $81.5 billion, MicroStrategy continues to trade at roughly 2.3 times the current value of its Bitcoin holdings.
The Kobeissi Letter highlighted unprecedented retail investor activity, noting that on a single Wednesday last week, retail investors purchased approximately $42 million of MSTR stock.
This marked the largest daily retail purchase on record, with total retail investment approaching $100 million for the week. The stock experienced extraordinary trading dynamics, with last week seeing $136 billion in trading volume—exceeding even Amazon Inc. AMZN, despite AMZN having a market cap nearly 29 times larger.
Why It Matters: Standard Chartered analyst Geoffrey Kendrick provided critical market insights, suggesting Bitcoin may test support zones between $85,000 and $88,700. His year-end price target remains $125,000, with a long-term projection of $200,000 by the end of 2025.
MicroStrategy’s investment approach involves a cyclical strategy of borrowing money through convertible notes, purchasing Bitcoin, driving price appreciation, selling shares at a premium, and reinvesting in more Bitcoin.
Analysts are questioning the sustainability of this model, particularly whether Saylor can continue raising debt to purchase Bitcoin and if institutional and retail investor enthusiasm will persist.
Bitcoin’s recent pullback from near $100,000 to around $93,440 reflects broader market uncertainties, including reduced U.S. Treasury term premiums, upcoming options expirations, and institutional repositioning.
Price Action: Bitcoin was trading at $93,433 at the time of writing, up by 0.80% in the last 24 hours.
According to Benzinga Pro data, the consensus price target for MicroStrategy is $449.50. The highest price target is $690, while the lowest is $140, implying a potential 54.56% upside based on the most recent analyst ratings.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
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