MicroStrategy Stock Seen As Bitcoin Bet, Analyst Assigns Buy Rating
A financial firm called Benchmark initiated coverage of MicroStrategy (MSTR) with a positive recommendation (buy rating) and a high price target ($990). This optimistic outlook is heavily dependent on the future value of Bitcoin (BTC).
Reasons for optimism:
- Increased demand for Bitcoin: The launch of exchange-traded funds (ETFs) directly linked to Bitcoin is expected to boost demand, driving up the price.
- Reduced supply: The upcoming bitcoin halving will cut the number of new bitcoins created in half, further tightening supply and potentially pushing prices higher.
- MicroStrategy's unique model: The company's large bitcoin holdings are seen as the main driver of its value. Their software business provides some stability and generates cash flow to buy even more Bitcoin.
- Historical trends: Benchmark points to past bitcoin halvings being followed by price surges.
MicroStrategy's current situation:
- They are the largest corporate owner of bitcoin.
- They recently increased their holdings by purchasing more coins.
Essentially, buying MicroStrategy stock is seen as a bet on the future price of Bitcoin. Benchmark believes the combination of factors mentioned above will drive the price of bitcoin significantly higher over the next two years, leading to a substantial increase in MicroStrategy's value.