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Published: February 27, 2024 at 6:35 PM ET
MicroStrategy Inc. stock could be a “timely play” with the expected Bitcoin halving event in April, new bulls say.
In theory, MicroStrategy MSTR is an enterprise analytics and business intelligence software company. However, the company is probably best known for having a large amount of Bitcoin BTCUSD on its balance sheet at the moment (approximately 193,000 Bitcoin as of the end of last week).
for…
MicroStrategy Inc. stock could be a “timely play” with the expected Bitcoin halving event in April, new bulls say.
On paper, MicroStrategy
MSTR
is a software company in the business of enterprise analytics and business intelligence.However, the company is likely best known for its large amount of Bitcoin at the moment.
BTCUSD
Its balance sheet holdings totaled approximately 193,000 Bitcoin as of the end of last week.
As such, Benchmark Company analyst Mark Palmer initiated coverage of MicroStrategy stock on Tuesday with a buy rating and a $990 price target, noting that Bitcoin “makes up a large portion of the company’s valuation. “The software business plays a supporting role as a stabilizer of valuation.” It is a means of generating valuation and cash flow used to purchase additional Bitcoins. ”
Do not miss it: Bitcoin-related stocks and ETFs rise as Bitcoin approaches record highs
With Bitcoin’s halving scheduled for April, Palmer thinks Bitcoin stocks are a bright spot. “Notably, the first three halvings were associated with a bull run in Bitcoin prices,” he wrote.
Bitcoin has already crashed recently, and Palmer sees other catalysts for progress in the future. For example, the launch of the Spot Bitcoin exchange-traded fund (ETF) earlier this year appears to be stimulating demand for the cryptocurrency, rather than at the expense of MicroStrategy stock.
See also: 5 ways Bitcoin ETFs are already changing the way you trade cryptocurrencies
“Some observers have suggested that the introduction of spot Bitcoin ETFs in the US will weigh on [MicroStrategy’s] We believe this stock continues to offer investors a unique value proposition, as equity investors who purchased the stock as a Bitcoin agent now have a new option to select such a proxy.” he wrote.
Unlike ETFs, MicroStrategy can use funds raised from issuing bonds or stocks to buy Bitcoin, Palmer said. The company can also use free cash flow generated from its software business to purchase cryptocurrencies.
Palmer assumes that MicroStrategy will increase its Bitcoin holdings to 200,000 Bitcoins by the end of 2025, by which time he believes the cryptocurrency’s price could reach $125,000. At this point, the company’s Bitcoin holdings could be valued at around $25 billion.
MicroStrategy stock rose more than 9% on Tuesday, along with broader gains in cryptocurrencies.
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