In a notable rebound, MicroStrategy Inc. experienced an 8.03% rise in pre-market trading on Wednesday following the slow recovery of Bitcoin BTC/USD. This comes after a significant 12.33% drop and closing at $353.69 the previous day, as per Benzinga Pro.
What Happened: On Wednesday, at 6:00 AM ET, Bitcoin was trading around $93,789.55 after dropping to $92,000 levels on Tuesday. Consecutively, MicroStrategy, with a holding of 386,700 Bitcoins valued at $35.4 billion, experienced an upward tick in its pre-market activity.
The company, under the leadership of CEO Michael Saylor, has been a focal point of market speculation due to a 23.64% decline in its stock over the past five sessions. This period also saw a 5.52% decrease in Bitcoin.
Analysts are questioning the sustainability of the company’s strategy which involves borrowing through convertible notes to buy Bitcoin, then selling shares at a premium to reinvest in more Bitcoin.
Last week marked a record for retail investment in MicroStrategy, with nearly $100 million invested and trading volume reaching $136 billion, surpassing even Amazon Inc. AMZN.
Based on the ratings of 12 analysts, MicroStrategy has a consensus price target of $449.5 The high is $690 issued by BTIG on Dec. 11, 2023. The low is $140 issued by Jefferies on Nov. 10, 2022.
The average price target of $563.33 between TD Cowen, Barclays, and Benchmark implies a 41.90% upside for MicroStrategy.
Why It Matters: MicroStrategy’s recent $3 billion offering of 0% convertible senior notes due 2029 has intrigued investors. These notes, offering no interest, were quickly snapped up by institutional buyers, indicating strong market interest despite the lack of traditional returns. The notes’ high conversion rate and potential equity upside have been attractive to investors.
However, the company’s stock has been under scrutiny. Gary Black of The Future Fund LLC has raised concerns about MicroStrategy’s valuation, suggesting it should be significantly lower than its current price. Black’s analysis points to a potential overvaluation, with a suggested price of $105 per share, which is about 75% lower than its current trading price.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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