In recent weeks, investors have compared MicroStrategy to meme stocks as the data visualization and reporting platform piled into Bitcoin late last year, even as the cryptocurrency set record after record. MicroStrategy, seen as a proxy for Bitcoin prices, benefited from the post-election Bitcoin rally. MicroStrategy, based in the Virginia suburbs outside Washington, has surged 58% in November alone, driven by a five-year cryptocurrency strategy. Then, as the cryptocurrency rally faded, the company co-founded by Michael Saylor gave back 25% in December but still soared 358% in 2024, making it one of the best-performing stocks of the year. It even joined the Nasdaq 100 Index and was included in the heavily traded Invesco QQQ Trust exchange-traded fund. MSTR 1Y Mountain MicroStrategy, 1 Year The combination of sky-high stock price, soaring popularity, and the cryptocurrency-native cheering section of social media has some questioning whether MicroStrategy will actually go the way of becoming a meme stock popular with retail investors on social media , but there are risks and vulnerability to sharp declines. Benchmark Co. analyst Mark Palmer rates MicroStrategy a Buy, a view he attributes to a lack of understanding of MicroStrategy’s novel Bitcoin buying strategy. “Whenever there’s a new approach in technology or on Wall Street, there are skeptics who are rooted in the traditional way of doing things and they’re going to say this new strategy is not sustainable,” Palmer told CNBC. “What we’re seeing is very concerning. Skepticism about Michael Saylor’s approach is not only understandable, but almost inevitable given the way Adopt Signals typically works. “Bitcoin Church” Saylor, now the company’s executive chairman, is a staunch Bitcoin advocate. writers and educators. He doesn’t shy away from media interviews, industry events or any opportunity to preach, explain why Bitcoin is the premier asset class, and interact with cryptocurrency enthusiasts and haters alike — at one point in December, even at a Microsoft shareholder meeting Give a speech. His social media is filled with rocket ship emojis and images of him as a religious icon for the Bitcoin church. “What Michael Saylor has done over the last few years is draw attention to what MicroStrategy is doing by embracing social media and meme culture, so he hasn’t been shy about using top memes and things of that nature to promote MicroStrategy,” Palmer said. “I think he would consider this part of his role as an evangelist for Bitcoin and MicroStrategy.” MicroStrategy began buying Bitcoin in 2020. The approach has become more aggressive over the past year, with the company raising billions of dollars through the sale of convertible bonds with the sole purpose of buying more Bitcoin. In 2024, MicroStrategy purchased Bitcoin 18 times, the last eight of which came after the November presidential election. Today, it holds 446,400 Bitcoins on its balance sheet, accounting for approximately 2% of the total global Bitcoin supply. But because Bitcoin is notoriously volatile, there are concerns that the value of Bitcoin will decline when MicroStrategy’s debt matures. However, Alex Miller, CEO of tool maker Hiro, said the notes do not mature until 2029 and that there has never been a five-year period when Bitcoin prices were lower on any day than five years ago. A network of currency applications and contracts. Surviving a Big Hit Benchmark’s Palmer admitted that because MicroStrategy trades so closely with Bitcoin, it could take a big hit when a big hit happens to Bitcoin — even in a bull market, Bitcoin was vulnerable to a 30% retracement and Not unfamiliar. Historically, Bitcoin has retraced 80% from cycle peaks. But MicroStrategy has already weathered the Bitcoin bear market — a 74% plunge in 2022 and a 64% plunge in Bitcoin — and Saylor’s Bitcoin buying strategy has survived. “There are definitely external factors, macroeconomic factors, that could cause MicroStrategy to adjust its approach, but as we’re seeing, especially in late 2022, even the cryptocurrency market is in disarray and skeptics are screaming that crypto is dead. , the company is able to keep its options open,” Palmer said. “There was no trigger, no catalyst, that could completely derail what it was doing. MicroStrategy went through this and came out the other side and was able to take a more aggressive approach to what it was doing in the second half of 2024. ” he added. Analysts at 156-year-old investment bank HC Wainwright said last week that accelerated adoption of Bitcoin by institutional investors and businesses, driven by expectations for cryptocurrency regulatory reform in 2024, could push Bitcoin to $225,000 this year. This could lead to MicroStrategy becoming more aggressive in making acquisitions. Thaler likened buying Bitcoin to investing in Manhattan real estate and said his company will “always continue to buy top properties.”
MicroStrategy trades like a meme stock. What investors need to know | Real Time Headlines
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