Micro Strategy 500% Annual Profit Bitcoin, Tesla Stock – Is MSTR The Best Short-Term Bet?
Nasdaq-listed software intelligence company MicroStrategy ( MSTR ) has boosted Bitcoin (BTC) significantly over the past year.
MSTR stock is up more than 500% year-to-date and 150% year-to-date (YTD) on May 21st at $1,279 per share. YTD
Why Microstrategy Is Better Than Bitcoin?
MicroStrategy's premium for Bitcoin reflects investors' confidence in the company's management, its strategy to leverage debt to acquire more Bitcoin, and its potential for future growth beyond the value of Bitcoin holdings alone.
In the year In the first quarter of 2024, MicroStrategy reported revenue of $115.2 million, falling below analysts' expectations of $121.73 million and a 5.5% year-over-year decline. The company reported a net income loss of $53.1 million, or $3.09 per share, from $461.2 million, or $31.79 per share, in the same period last year.
Meanwhile, MicroStrategy reported $3.55 billion in net long-term debt that could be serviced by cash flow generated from its core business model. The company is now building a Bitcoin-based decentralized identity solution in what appears to be a bid to boost its revenue in the coming quarters.
Microstrategy Bitcoin is up 50% per share since 2021.
MSTR's speculative valuation with Bitcoin comes as the company's BTC per share has increased by 50% since Q1/2021.
In the year As of March 2021, MicroStrategy owns 91,064 BTC of 11.3 million shares outstanding, which equates to approximately 0.008059 BTC per share. In December 2022, the company increased its holdings to 132,500 BTC and had 11.5 million shares, which increased to 0.011522 BTC per share.
In the year As of March 2024, MicroStrategy has outstanding 205,000 BTC in 17 million shares, yielding approximately 0.012059 BTC per share.
MSTR also beat most crypto-exposure stocks
Investors are willing to pay more for shares of MicroStrategy than the equivalent price of bitcoin per share, reflecting the company's operating business and growth prospects.
Related: Microstrategy for Bitcoin: Analyst Is Trading ‘Unwarranted Premium'
This sentiment is reflected in Coinbase's stock (COIN), which has outperformed Bitcoin over the past twelve months. But MicroStrategy is doing well, mainly because of the ongoing lawsuit filed by the US Securities and Exchange Commission (SEC).
Similarly, Tesla (TSLA)—the winner of everything since the pandemic—is now underperforming Bitcoin due to weak earnings over the past few quarters since 2019 (and MSTR).
Moreover, mining stocks have begun to underperform Bitcoin and MicroStrategy, as indicated by the returns of the Valkyrie Bitcoin Miners ETF (WGMI), which tracks megacap Bitcoin mining companies over the past 12 months.
Is MSTR a better short-term bet than Bitcoin?
From a technical perspective, MSTR appears to be retracing toward $2,000 after testing a support confluence that includes the 0.5 Fibonacci retracement level, the 50-day exponential moving average (50-day EMA, red wave) and resistance-turnover support. Uptrend line support.
The continued rally in the Bitcoin market could push MicroStrategy stock to a new record high, with the gains likely to fuel Bitcoin's growth. This makes MSTR an attractive short-term bet based on the recent rise in premium against BTC.
Conversely, a pullback in the Bitcoin market could result in a broader MSTR correction that could outpace even BTC's losses. This is because, according to analyst Celeb Franzen, MSTR has a history of underperforming BTC during BTC/USD correction cycles.
MSTR's primary downside target during a correction is seen at the 0.382 Fib line around $1,290, a 25% drop from the current price level.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
