MicroStrategy is the publicly traded company with the most bitcoin in its treasury.
“If you are bullish on BTC, you should consider MSTR,” according to analysts at Stony Chambers.
MicroStrategy (MSTR), the publicly traded company with the largest amount of bitcoin (BTC) in its treasury, is set to soar even further in the market. This is according to the analysis firm Stony Chambers, which highlights the strategic advantages that investing in this company could have, especially in the context of a boom in fiat money liquidity.
“MicroStrategy should go much higher because it is able to intelligently increase its amount of bitcoin (BTC) per share,” he notes in a report recent.
Stony Chambers has rated MSTR stock a clear buyarguing that the company has been able to integrate bitcoin as a fundamental part of its financial strategy.
Currently, MSTR owns a total of 252,220 BTC in its treasury, with its last acquisition being more than 7,400 BTC between September 13 and 19, 2024, with an investment of approximately $460 million.
MicroStrategy’s bet on bitcoin is not just about accumulating the digital asset. The company, under the direction of Michael Saylor, has made this strategy an essential part of its corporate treasury.
This move It is interpreted as a vote of confidence in the long-term value of bitcoinwhich, while volatile, has also shown significant growth over time.
Bitcoin per share: the true performance of MicroStrategy
Stony Chambers goes a step further and explains why MSTR stock is trading above the book value of the company’s BTC reserves.
Bitcoin’s return per diluted share is a “key piece” in this explanation, he highlights.
In this sense, the firm gives an example of a BTC yield of 17% until September 13 and 17.8% until September 20, 2024. This performance implies that, For every share someone owns in MSTR, the value in BTC increases.
This is because diluted shares include those that would be issued if all of the company’s convertible debt were converted into shares.
While By directly holding 1 BTC the investor does not generate additional returnsby investing in MSTR you get additional value.
For every bitcoin MicroStrategy owned on January 1, 2024, the value has increased to 1,178 BTC as of September 20. This increase creates a premium in the MSTR share price, reflecting the growth in value that the company offers compared to simply holding bitcoin.
The strength of MicroStrategy shares in the stock market was confirmed this week. The company reached a new milestone by seeing its stock exceed $227thus establishing a new all-time high. This can be seen in the following graph. TradingView.
This achievement represents an increase of 186% so far this year and 486% in the last year, reaffirming Stormy Chambers’ investment thesis.
Leverage and exponential growth
Another reason behind MicroStrategy’s success is its leverage. The company has $3.8 billion in long-term debt, while its market capitalization amounts to $35 billion.
This leverage, of approximately 1.1 times, allows MicroStrategy finance part of its operation and investments with debtwhich magnifies both the gains and the risks. This is reflected in the stock’s “beta,” which measures MSTR’s sensitivity to bitcoin’s behavior.
With a beta of 1.1, every time bitcoin rises 1%, MicroStrategy stock tends to rise 1.1%.
This effect has allowed MSTR Stock Outperforms Big Tech Companies such as Nvidia or the so-called “Magnificent 7” (Apple, Microsoft, Amazon, Google, Netflix, Tesla and Meta Platforms).
Since Saylor decided to prioritize the purchase of bitcoin, MicroStrategy shares have grown by 1,071%, even surpassing the growth of Nvidia, which has been 939% in the same period, as reported by CriptoNoticias.
Although MicroStrategy is known for its investment in bitcoin, Its main business remains software development. This segment is not outstanding, but continues to generate considerable income, explains the analysis.
The company generates around $111 million per quarter from this part of the business, as seen below.
This component of the business is rarely mentioned (usually because it is unimpressive), but should be highlighted for its contribution to MSTR’s overall BTC acquisition strategy. The proceeds allow MSTR to pay off debt which is used to purchase more BTC and generate a positive return on BTC.
Stony Chambers, analysis firm.
The risks behind the strategy
Nevertheless, Investing in MicroStrategy is not risk-free. Stony Chambers warns that if the price of bitcoin crashes, the company’s leveraged strategy could cause massive capital destruction.
In such a scenario, holders of convertible bonds could choose to recover their capital, which would leave MSTR shareholders vulnerable to possible liquidation.
Another risk that the firm considers exaggerated is the idea that MicroStrategy shareholders do not really own the bitcoin that the company ownssince they are in a subsidiary called MacroStrategy.
He clarifies that this notion is “absurd” and that shareholders can ultimately assert their rights to the BTC held in MacroStrategy through legal claims if necessary.
“If you are bullish on BTC, you should consider a position in MSTR,” notes Stony Chamber.
The additional yield offered by its shares and its ability to outperform bitcoin itself position it as an attractive investment in this volatile but growing market.
Clarification: This article is written for informational purposes. It does not constitute an investment recommendation or financial advice.