It’s probably the holiday season all year round at Michael Saylor. THE MicroStrategy (MSTR) founder and president is one of the greatest bitcoin bulls and must have liked to see the asset outperform in 2023. Namely, the leading crypto sees 2023 up 155%.
The last 3 months have been particularly rich, with BTC gaining 56% over the period. Canaccord analyst Joseph Vafi has a clear idea of what’s driving these gains. “As we have stated multiple times,” the 5-star analyst said, “we believe spot BTC continues to rise ahead of BTC ETF spot approvals in the US in January.”
Never one to think there is such a thing as too much bitcoin, in the meantime, Saylor has stocked up. After purchasing approximately 16,130 bitcoins for $593 million in November (at an average price of $36,785 per bitcoin), MicroStrategy revealed last week that it had purchased an additional 14,620 bitcoins in December. At an average price of $42,110 each, this purchase cost the company an additional $616 million. As of December 26, MicroStrategy’s BTC stack stood at 189,150, with an overall average acquisition price of approximately $31,200 per bitcoin. At the time of writing, one bitcoin is worth $42,375.
As Vafi notes, investors looking to get in on the Bitcoin game can simply stay on the stock market and buy MSTR stock. While Bitcoin’s direct returns have obviously been great, MSTR stock is up 346% this year. Here, Vafi also has an explanation on the disparity between the display of BTC and that of MSTR stocks. “MSTR’s relative outperformance against BTC remains in part the scarcity premium for equity investors seeking exposure to BTC,” he explained. “While there are other plays of stocks with exposure to BTC, they carry significantly higher operational risk (COIN and Bitcoin miners, for example). Although MSTR has some operational risk in its business, we would quantify it even less on a comparative basis since its BI software business is delicate, highly recurring and cash flow rich.
However, it is the Bitcoin holdings that constitute the main part here. Currently, Vafi estimates that MicroStrategy’s software business represents less than 15% of the company’s overall value, with the vast majority now owed to the company’s HODLing (which refers to the purchasing strategy and conservation) 189,150 bitcoins. “In comparison,” Vafi notes, “most other crypto-exposed stocks do so because of their trading operations; and few have an HODL of any hardware size.
Ultimately, due to continued BTC price appreciation combined with “new accretive additions to the HODL,” Vafi believes it is time to establish a new price target for MSTR stock. Its target increases from $670 to $791, leaving room for additional gains of 25% from current levels. (To see Vafi’s track record, Click here)
Over the last 3 months, only 2 other analysts have participated in MSTR ratings, but like Vafi, they are also bulls, providing the stock with a Strong Buy consensus rating. The average target stands at $713.67, implying share gains of 13% for the coming year. (See MicroStrategy stock forecasts on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the analysts featured. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.