Analysts at research and brokerage firm Bernstein said they expect business intelligence firm MicroStrategy’s bitcoin ownership to rise from 1.7% of the circulating supply to 4% over the next decade, updating their price target for MSTR to $600 by the end of 2025.
“MicroStrategy’s bitcoin treasury model is unprecedented on Wall Street, in our view,” the analysts led by Gautam Chhugani wrote in a note to clients on Monday. “A company on an insatiable path to attract billions in global capital to invest in bitcoin.”
Bernstein previously set a target of $290 in June, when the stock was trading for around $148, a price that was subsequently hit on Nov. 11 amid a near 100% surge over the past month and 509% year-to-date, according to TradingView. MicroStrategy stock closed up 6.2% on Friday at $421.88, meaning the new target represents a 42% upside potential from here in their view. MSTR is currently trading up 6% at $447.70 pre-market.
MSTR/USD price chart. Image: TradingView.
The analysts’ MicroStrategy thesis hinges on three factors. Firstly, whether investors are structurally long bitcoin; secondly, whether MicroStrategy has any liquidity or insolvency risk; and thirdly, whether the firm can scale capital over the long term.
They believe bitcoin is in a sustained bull market supported by favorable regulatory conditions and U.S. government backing under the incoming Trump administration, growing institutional adoption and a macroeconomic backdrop of low interest rates, inflation risks and record fiscal debt.
MicroStrategy’s debt is long-term unsecured convertible debt, implying negligible risk to its balance sheet liquidity despite bitcoin's volatility, Chhugani said. In terms of scaling capital long-term, while “nothing lasts forever,” the analysts noted the company is currently running ahead of its $42 billion capital raise plans ($21 billion in debt and $21 billion in equity) over the next three years, having secured $3 billion in convertible debt and $6.6 billion in equity raises this month alone. Given the favorable bitcoin market conditions, they anticipate MicroStrategy will complete the plan ahead of schedule within the next 18 months, with $32.4 billion in potential acquisitions remaining.
In their “base case” scenario of MicroStrategy acquiring 4% of bitcoin’s circulating supply by the end of 2033, the firm would hold approximately 830,000 BTC, or $830 billion worth of the cryptocurrency at a price of $1 million per bitcoin, the analysts said.
Bernstein values MicroStrategy using a sum-of-the-parts approach, combining the enterprise value of its software business, the market value of its bitcoin holdings and a premium or discount to its bitcoin net asset value. It values the software business at a 2x enterprise value/sales multiple, while the bitcoin premium is derived from a discounted 2033 price, factoring in bull, bear and base-case scenarios with weighted probabilities of 25%, 50% and 25%, respectively. Using a 14% cost of equity, the analysts estimate a long-term sustainable premium of approximately 75% to derive a price target of $600 by the end of 2025.
Not everyone is as optimistic, with MicroStrategy’s shares plummeting more than 20% during Thursday's trading session last week after a research firm noted it was shorting the stock.
Citron Research, led by investor Andrew Left, cheered MicroStrategy Executive Chairman Michael Saylor's vision for selling debt to fund the company's bitcoin purchases but noted that the stock's massive runup has been overheated. "MSTR’s volume has completely detached from BTC fundamentals," the firm said. "While Citron remains bullish on bitcoin, we’ve hedged with a short MSTR position.”
MicroStrategy currently trades at a 230% premium over its approximate $32 billion bitcoin holdings. “However, bitcoin bull markets would mean the premium could stay higher than historical average, allowing MSTR to sell more debt/equity, leading to more bitcoin buying,” the Bernstein analysts said.
Bernstein described MicroStrategy as a “bitcoin magnet attracting earth’s capital reserves,” with the firm making its largest set of acquisitions to date when it purchased an additional 51,780 BTC for approximately $4.6 billion at an average price of $88,627 per bitcoin between Nov. 11 and Nov. 17.
The company now holds 331,200 BTC, having adopted bitcoin as its primary treasury reserve asset since 2020. MicroStrategy’s total holdings were bought at an average price of $49,874 per bitcoin, a total cost of around $16.5 billion, including fees and expenses.
Saylor previously told Bernstein that the company eyed a trillion-dollar valuation in an endgame to be the leading “bitcoin bank.”
Bitcoin is currently trading for $98,629, according to The Block’s Bitcoin Price Page, having gained 7.4% over the past week and 133% year-to-date.
Gautam Chhugani maintains long positions in various cryptocurrencies. Bernstein and its affiliates may receive compensation for investment banking services from MicroStrategy.
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