MicroStrategy Inc. (MSTR), the company spearheaded by Michael Saylor, experienced a phenomenal surge in its stock price on Monday, reaching a record closing high of $340 per share. This remarkable climb, a staggering 25.73% increase, significantly outperformed the Nasdaq 100 Index, which declined by a mere 0.05% on the same day. The momentum carried into after-hours trading, with the shares further rising by 5.31% to $358.06 per share. This surge marked the highest point for MicroStrategy shares since the dot-com bubble of March 2000.
The driving force behind this rally? The meteoric rise of Bitcoin (BTC/USD), a cornerstone asset within MicroStrategy’s portfolio. While the company is known for its business intelligence, mobile software, and cloud-based services, it has become synonymous with Bitcoin, earning the title of the world’s first “Bitcoin Treasury company.” At the time of writing, Bitcoin was trading at a robust $89,768. The company’s strategic alignment with Bitcoin has proven to be a significant advantage, allowing MicroStrategy to borrow and raise capital at favorable rates, which they reinvest in acquiring even more Bitcoin.
MicroStrategy’s bold commitment to Bitcoin was further highlighted by their recent acquisition of approximately 27,200 BTC between October 31 and November 10. This acquisition, totaling $2.03 billion in cash, was made at an average cost of $74,463 per coin, right before Bitcoin reached its all-time high of $89,560.95 on Monday. As of November 11, MicroStrategy boasts a total of 252,220 bitcoins in its treasury, purchased at an average price of $39,266, according to Coingecko. This remarkable holding translates to roughly 1.201% of the total Bitcoin supply, currently valued at an astounding $22.64 billion.
MicroStrategy’s Bitcoin strategy has propelled it to the forefront of corporate Bitcoin holders, ranking among the top five alongside companies like Marathon Digital Holdings (MARA), Galaxy Digital Holdings (GLXY), Tesla Inc. (TSLA), and Coinbase Global Inc. (COIN).
The dot-com bubble, a period of frenzied investment in internet companies in the late 1990s, peaked in March 2000, with the technology-heavy Nasdaq index skyrocketing from under 1,000 to over 5,000 between 1995 and 2000. This period of exuberance, however, was followed by a dramatic market correction as the bubble burst between 2001 and 2002. MicroStrategy shares had reached $313 apiece on March 10, 2000, a milestone that has now been surpassed by the recent stock surge.
MicroStrategy’s shares have exhibited impressive growth, registering a year-to-date rise of 396.21%. The trading volume on Monday reached a substantial 37.315 million shares, according to Nasdaq data. However, the relative strength index (RSI) stands at 81.31, indicating that the stock might be overbought, a factor investors should consider. Despite this, four analysts tracking the company maintain a ‘buy’ rating on the stock. The three-month average of 12-month analyst price targets suggests a share price of $302.75, a figure already eclipsed by the company’s current valuation.
MicroStrategy’s financial prowess and strategic maneuvering, particularly their aggressive use of excess cash to acquire more Bitcoin, have significantly bolstered their bitcoin-per-share metric, directly enhancing shareholder value. Furthermore, the company’s potential for a market valuation exceeding the traditional 3-4x forward revenue, coupled with a flourishing cloud business, innovative AI initiatives, and anticipated favorable accounting changes for digital assets, paints a promising outlook for MicroStrategy’s financial future.
