MicroStrategy Positions To Capitalize On Upcoming Bitcoin Halving: Analyst

Benchmark analyst Mark Palmer maintained MicroStrategy Inc MSTR with a Buy and raised the price target from $990 to $1,875.

The analyst noted MicroStrategy, a levered play on Bitcoin, is particularly well positioned to benefit from the fourth Bitcoin halving set to occur by April 20, when the new supply of Bitcoin will reduce by half.

The new price target for MicroStrategy reflected his assumption Bitcoin would reach $150,000 by the end of 2025. 

Also Read: MicroStrategy’s Bitcoin Surge: How a Tech Company Outpaces eBay and Delta in Market Cap

Palmer initiated coverage on Feb. 27 based on his assumption that Bitcoin’s price would reach $125,000 by year-end 2025. Since then, the price of Bitcoin has rallied ~27%. 

He noted the three previous Bitcoin halvings, in 2012, 2016 and 2020, saw an explosive appreciation in the crypto’s price occur after the halving took place.

While the upcoming Bitcoin halving would create a supply shock like the previous ones, he noted the event’s impact could be magnified by the concurrent demand shock created by the emergence of spot Bitcoin ETFs. As of April 4, the 10 spot Bitcoin ETFs collectively managed 507,472 Bitcoins worth almost $34 billion. He expected the inflows into spot Bitcoin ETFs to grow dramatically once institutions begin to invest in them in earnest.

Another driver of the new price target for MicroStrategy is his expectation that the company would continue to add to its Bitcoin holdings using the proceeds from capital markets transactions and excess cash generated by its enterprise software business. 

Palmer estimated MicroStrategy would have amassed 298,246 bitcoins by year-end 2025, up from the 214,246 bitcoins it held as of March 19. 

He noted the company increased its Bitcoin holdings for 15 consecutive quarters.

Palmer also wrote that several factors supported the case for the stock to trade at such a premium. The most impactful of these was MicroStrategy’s ability to tap the capital markets at compelling interest rates — the two convertible debt offerings the company executed during March had coupons of 0.625% and 0.875% — and then used the proceeds to purchase more Bitcoins.

MicroStrategy further powered its Bitcoin acquisition strategy with excess cash from its enterprise software business. As a result of the company’s financial engineering and its use of excess cash to acquire more of the crypto, its Bitcoin per share continued to increase, benefiting shareholders.

Palmer projected first-quarter revenue and EPS of $121.5 million and $(0.46).

MicroStrategy stock surged 412% in the past 12 months. Investors can gain exposure to the stock via First Trust SkyBridge Crypto Industry And Digi Economy ETF CRPT and Advisor Managed Portfolios Miller Value Partners Appreciation ETF MVPA.

MSTR Price Action: MicroStrategy shares traded higher by 6.61% at $1,534.15 at publication Monday.

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