'Purest' Crypto-Equity Play That Has 36% Upside: Analyst Says Buy Here

MicroStrategy Inc MSTR caught the eye of Benzinga analyst Gianni Di Poce, after the crypto-friendly company repaid the outstanding principal balance on its $205 million loan from crypto lender Silvergate Capital Corp SI, and added 6,455 Bitcoins BTC/USD to its portfolio.

The MSTR Analyst: Di Poce said in his weekly “Benzinga Pro Insider Report” that he is bullish on MicroStrategy, and sees the stock going to $350 or $360, but said that's predicated on shares staying above the $220 to $225 level.

The analyst noted that despite generating $499.26 million in revenue last year, the company lost $1.47 billion, largely due to the extreme volatility seen in cryptocurrencies. That lack of profitability led other analysts to consider alternative valuation metrics, like MicroStrategy’s Price-to-Sales ratio of 5.97 and its EV to EBITDA ratio of 254.16.

Di Poce said MicroStrategy is considered one of the purest crypto-equity plays, as it currently holds 138,955 Bitcoin as of March 27 at an average price of $29,817.

This means the price of BTC is just $2,608 away from the company being in a breakeven position, as Bitcoin is currently trading at $27,209.

In addition to its involvement in cryptocurrency, MicroStrategy recently received authorization to operate under FedRAMP guidelines for their MicroStrategy Cloud for Government platform.

The company has also established a new business unit focusing on technology related to the Lightning Network, a payment protocol for Bitcoin.

From a technical standpoint, the stock is consolidating under the neckline of an inverted head and shoulders formation, Di Poce adds that a clearance of resistance in the pattern could lead to an explosive rally higher.

Further, Di Poce said Soros Fund Management recently increased its exposure to the company with 100,000 shares, and it holds another 194.38 million preferred shares.

It should be noted that MicroStrategy is a candidate for a short squeeze, with over 39% of its floated shares being sold short.

MSTR Price Action: Shares of MicroStrategy are trading 5.55% lower to $242.42 at the time of publication on Monday, according to Benzinga Pro.