Canaccord Genuity has adjusted its price target for MicroStrategy (MSTR) from $185 to $173, but maintains a Buy rating on the stock. This change comes as MicroStrategy, a business intelligence company, continues its aggressive Bitcoin (BTC/USD) acquisition strategy. The company has amassed a sizable cryptocurrency portfolio, a move that has fueled investor interest and debate.
According to Canaccord analyst Joseph Vafi, MicroStrategy has acquired over $1.1 billion in additional Bitcoin in just six weeks, bringing its total holdings to approximately 244,800 Bitcoin, valued at around $14.6 billion. Vafi highlights the company’s commitment to its Bitcoin strategy, stating, “MicroStrategy remains aggressive in building its BTC HODL.” He further notes that MicroStrategy has approximately $900 million left from its recent shelf offering and a favorable structure for acquiring more Bitcoin through equity sales, leading him to anticipate continued activity in Bitcoin purchases.
Vafi emphasizes MicroStrategy’s “Bitcoin Yield” metric, which measures the growth of its Bitcoin holdings compared to the growth of its share count. This metric stands at 17% year-to-date and 4.4% quarter-to-date, suggesting accretive Bitcoin acquisitions. He explains that the Bitcoin Yield differential reflects MicroStrategy’s use of proceeds from convertible notes earlier in the year to acquire Bitcoin more efficiently than using straight equity more recently.
Despite the lowered price target, Canaccord remains optimistic about MicroStrategy’s strategy and the broader Bitcoin market. Their valuation methodology incorporates a 20% one-year appreciation in Bitcoin price, a 15% increase in MicroStrategy’s software business value, and the assumption that the current sum-of-the-parts premium remains intact. Vafi identifies the 2024 election cycle as a potential catalyst for Bitcoin’s performance, indicating a positive outlook for the cryptocurrency market.
The upcoming Benzinga Future of Digital Assets event on November 19th is anticipated to offer further insights into the strategies of companies heavily invested in cryptocurrencies. This event provides a platform for industry leaders to discuss the future of digital assets, making it a valuable resource for anyone seeking to stay abreast of the latest trends and developments in the crypto space.
