MicroStrategy Is 'Aggressive' With 'BTC HODL', Analyst Says, Citing New Bitcoin Buys

Canaccord Genuity has revised its price target for MicroStrategy MSTR from $185 to $173 while maintaining a Buy rating on the stock.

The adjustment comes as the business intelligence company continues its aggressive Bitcoin BTC/USD acquisition strategy, which has seen it amass a significant cryptocurrency portfolio.

What Happened: According to Canaccord analyst Joseph Vafi, MicroStrategy has purchased over $1.1 billion in additional Bitcoin in just six weeks, bringing its total holdings to approximately 244,800 Bitcoin, valued at around $14.6 billion.

“MicroStrategy remains aggressive in building its BTC HODL,” Vafi noted in his report. “Given MicroStrategy’s aggressive acquisition of Bitcoin over the past few years, approximately $900 million left on its most recent shelf offering, and the accretive setup to acquire more Bitcoin using equity sales, we would expect to see the company remain active in its purchases.”

The analyst highlighted MicroStrategy’s newly introduced “Bitcoin Yield” metric, which measures growth in its Bitcoin holdings versus growth in share count.

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This metric stands at 17% year-to-date and 4.4% quarter-to-date, indicating accretive Bitcoin acquisitions. Vafi explained, “While MSTR’s stock continues to trade at a material premium to its HODL, we attribute the Bitcoin Yield differential YTD v QTD to using proceeds from convertible notes earlier in the year to acquire more bitcoin even more accretively versus straight equity more recently.”

Despite lowering the price target, Canaccord remains optimistic about MicroStrategy’s strategy and the overall Bitcoin market.

The firm’s valuation methodology takes into account a 20% one-year appreciation in Bitcoin price versus current spot rates, a 15% increase in value to MicroStrategy’s software business, and the assumption that the current sum-of-the-parts premium remains intact.

Vafi also pointed to potential catalysts for Bitcoin’s performance, stating, “We view the 2024 election cycle as a positive catalyst” for the cryptocurrency market.

What’s Next: The upcoming Benzinga Future of Digital Assets event on Nov. 19 is expected to provide further insights into the strategies of companies heavily invested in cryptocurrencies.

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