A Bitcoin Investment Powerhouse
Barclays analyst Ramsey El-Assal initiated coverage on MicroStrategy Inc (MSTR) with an Overweight rating and a price target of $146. He sees MicroStrategy as a unique vehicle for public company investors to gain exposure to Bitcoin, offering several key advantages.
Firstly, MicroStrategy's resilient capital deployment model provides a long runway for continued Bitcoin accumulation, protecting against potential liquidity challenges. Secondly, its software business boasts strong performance, driven by a fast-growing market and demand for next-generation technology. Additionally, the company's shift towards subscription services leads to higher-margin and recurring revenue, while its software business enjoys high retention rates.
El-Assal highlights MicroStrategy's success in leveraging its business intelligence software business to amass a significant Bitcoin holding, currently valued at approximately $13 billion. He compares the company to a Bitcoin index fund with the ability to generate its own investment capital, offering investors exposure to the underlying Bitcoin price and potential future accumulation.
Furthermore, MicroStrategy's strategy appears resilient to potential "crypto winters" due to its low average cost of debt and staggered maturities. The analyst also expects the company's partnerships with large hyperscalers to help maintain market share in the growing business intelligence and artificial intelligence space.
While the analyst projects fiscal 2024 revenue of $474 million and an EPS loss of $(1.58), he remains optimistic about MicroStrategy's long-term prospects as a leading Bitcoin investment vehicle.