Shares of Michael Saylor‘s MicroStrategy Inc. MSTR rose as much as 25.73% to hit a record closing high at $340 apiece, as compared to a 0.05% decline in the Nasdaq 100 Index Monday. The shares rose by 5.31% to $358.06 per share during the after-hours trade the same day.
The surge marked the highest level for the shares on Monday since the dot-com bubble in March 2000.
What Happened: The rally in MicroStrategy shares was fueled by the rise in Bitcoin BTC/USD, a crucial asset held by the latter in its portfolio. MicroStrategy is a business intelligence, mobile software, and cloud-based services company, but more than anything else, it serves as a proxy for Bitcoin.
At the time of writing, BTC was trading at $89,768.
The company calls itself the world's first "Bitcoin Treasury company." Volatility in MicroStrategy’s stock due to its Bitcoin position allows the company to borrow and raise capital at a low cost in order to turn around and buy more Bitcoin.
MicroStrategy announced that it acquired approximately 27,200 BTC between Oct. 31 and Nov. 10 for approximately $2.03 billion in cash. The company purchased the bitcoin at an average cost of $74,463 per coin and the cryptocurrency hit an all-time high at $89,560.95 on Monday. As of Nov. 11, MicroStrategy held a total of 252,220 bitcoins, purchased at an average price of $39,266, according to Coingecko. Consequently, MicroStrategy holds about 1.201% of the total Bitcoin supply, with its current holding priced at around $22.64 billion.
The top five largest corporate holders of Bitcoin, following MicroStrategy, include Marathon Digital Holdings MARA, Galaxy Digital Holdings GLXY, Tesla Inc. TSLA and Coinbase Global Inc. COIN.
Also Read: What’s Going On With MicroStrategy Stock Monday?
Why It Matters: The dot-com bubble was a stock market bubble that ballooned during the late 1990s and peaked on Friday, March 10, 2000. It was fueled by the rise in investments in Internet-based companies.
Equity markets experienced exponential growth during this period, exemplified by the technology-dominated Nasdaq index, which surged from under 1,000 to over 5,000 between 1995 and 2000. This period of exuberance was followed by a market correction, as the bubble burst between 2001 and 2002, ushering in a bear market.
MicroStrategy shares had hit $313 apiece on March 10, 2000, as per Benzinga Pro data, which was transcended by Monday’s rally.
Price Action: MicroStrategy shares have risen by 396.21% on a year-to-date basis. The total traded volume stood at 37.315 million shares, according to Nasdaq. Benzinga Pro data suggested the relative strength index was at 81.31, implying that the stock may be overbought.
Four analysts tracking the company maintain a ‘buy’ rating of the stock, according to Nasdaq data. The three-month average of the 12-month analyst price targets implies a share price of $302.75, which has already been surpassed by the company.
As per Benzinga Pro, the company’s strategic financial maneuvers, particularly its use of excess cash to acquire additional bitcoins, have boosted its bitcoin-per-share metric, thereby enhancing shareholder value. Furthermore, the potential expansion of market valuation beyond the traditional 3-4x forward revenue, coupled with an accelerating cloud business, innovation through AI initiatives, and forthcoming favorable accounting changes for digital assets, supports a positive outlook for MicroStrategy’s financial future.
- Read Next: Michael Saylor's MicroStrategy Racks Up Over $10B In Unrealized Profit As Bitcoin Blows Past $82K
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