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Investors Bet on Crypto with Unique Software Company MicroStrategy, Says TD Cowen
MicroStrategy: The Best Way for Institutions to Acquire Bitcoin Exposure
TD Cowen analyst Lance Vitanza recommends investors looking to bet on crypto should consider MicroStrategy. In a note to clients, Vitanza states that MicroStrategy is the "best way for institutions to acquire exposure to bitcoin." While MicroStrategy is a leading provider of business intelligence software, its unique balance sheet sets it apart. The company uses its retained earnings to buy and hold bitcoins, believing that it will prove to be a superior store of value compared to metals and fiat currencies. Vitanza sees MicroStrategy as an attractive vehicle for investors looking for Bitcoin exposure.
MicroStrategy's Advantage Over ETFs and Bitcoin Purchases
According to Vitanza, MicroStrategy's stock offers investors certain advantages over traditional methods of acquiring bitcoin exposure. Unlike exchange-traded funds (ETFs) or buying bitcoin outright, MicroStrategy's stock does not come with associated fees. Additionally, MicroStrategy's underlying business and balance sheet provide downside protection. As of June 27, MicroStrategy held 152,333 bitcoins on its balance sheet, with a purchase price of approximately $4.5 billion, making it a significant player in the crypto market. The company's market cap is currently under $6 billion.
The Performance of MicroStrategy's Stock
MicroStrategy's stock has outperformed bitcoin this year, with a rise of over 200%. However, since November 2021, when bitcoin hit its record high, MicroStrategy's shares have declined by more than 40%. It's worth noting that the stock is still below its highs from 2011. MicroStrategy's volatile nature and recent drama within its C-suite may have contributed to its fluctuating stock performance. The company's executive chairman, Michael Saylor, who is a bitcoin supporter, was accused of tax evasion by the DC attorney general last year. Additionally, the company's chief revenue officer resigned on July 5.
Potential Positive Catalysts and Price Target
Vitanza believes there are potential positive catalysts for MicroStrategy's stock in the future. These include broader boosts for bitcoin, such as the approval of a spot bitcoin exchange-traded fund (ETF) and an upcoming halving event. Vitanza has set a price target of $520 per share for MicroStrategy's stock, which is the highest among analysts covering the stock. This target represents a 19% increase from the stock's closing price on Tuesday.
In addition to the potential positive catalysts, MicroStrategy is also pushing for accounting rule changes related to bitcoin that could improve its reported numbers. With its unique approach to acquiring and holding bitcoin, MicroStrategy provides investors with a distinctive way to gain exposure to the cryptocurrency while benefitting from the company's underlying business and balance sheet strength.
Conclusion: MicroStrategy's Unique Approach to Bitcoin May Benefit New Businesses
MicroStrategy's innovative approach to acquiring and holding bitcoin has caught the attention of investors looking to bet on crypto. TD Cowen analyst Lance Vitanza believes that MicroStrategy is the "best way for institutions to acquire exposure to bitcoin." This presents an interesting opportunity for new businesses entering the crypto space.
By leveraging MicroStrategy's stock, investors can acquire bitcoin exposure without the associated fees of exchange-traded funds (ETFs) or direct purchases. This advantage makes it an attractive option for businesses looking to invest in cryptocurrencies without incurring additional costs.
Furthermore, MicroStrategy's underlying business and balance sheet provide downside protection. With a significant holding of 152,333 bitcoins on its balance sheet, MicroStrategy is positioned as a major player in the crypto market. This stability and market presence can benefit new businesses seeking to enter the crypto space, as it offers a sense of security and reliability.
While MicroStrategy's stock has experienced volatility and recent controversies within its C-suite, the potential positive catalysts, such as the approval of a bitcoin ETF and upcoming halving events, present opportunities for growth. Vitanza has set a price target of $520 per share for MicroStrategy's stock, indicating potential upside for investors.
In conclusion, MicroStrategy's unique approach to acquiring and holding bitcoin, coupled with its underlying business and balance sheet strength, offers a distinctive opportunity for new businesses looking to invest in cryptocurrencies. By considering MicroStrategy as a means of gaining bitcoin exposure, new businesses can navigate the crypto market with a trusted and established player, potentially reaping the benefits of this unique investment strategy.
Article First Published at: https://www.cnbc.com/2023/07/26/td-cowen-analyst-just-made-a-risky-buy-call-on-a-bitcoin-play.html.svg)
