MicroStrategy (MSTR), a software intelligence firm listed on Nasdaq, has seen remarkable performance compared to Bitcoin (BTC) in the past year.
Over the course of a year, MSTR stock has surged by more than 500% and 150% year-to-date (YTD), reaching approximately $1,279 per share as of May 21. In comparison, Bitcoin’s price has increased by 166% in a year and around 60% YTD.
The reason behind MicroStrategy’s outperformance of Bitcoin lies in several factors. Firstly, investors have shown confidence in the company’s management and its strategy of leveraging debt to acquire more Bitcoin. Additionally, there is potential for future growth beyond the value of its Bitcoin holdings alone.
In the first quarter of 2024, MicroStrategy reported revenues of $115.2 million, slightly lower than analyst expectations of $121.73 million, marking a 5.5% decline from the previous year. The company also posted a net loss of $53.1 million, or $3.09 per share, in stark contrast to the net income of $461.2 million, or $31.79 per share, reported in the same period last year.
Despite this, MicroStrategy reported a net long-term debt of $3.55 billion, which can be serviced by cash flows generated from its core business model. The company is now developing a Bitcoin-based decentralized ID solution as a means to boost its revenues in the coming quarters.
One reason for MSTR’s overvaluation compared to Bitcoin is the increase in BTC per share since Q1/2021. From March 2021 to March 2024, MicroStrategy increased its Bitcoin holdings from 91,064 BTC to 205,000 BTC, resulting in approximately 0.012059 BTC per share.
MicroStrategy’s outperformance is not limited to Bitcoin alone. Other crypto-exposed stocks, such as Coinbase (COIN) and Tesla (TSLA), have also underperformed compared to MSTR. Coinbase is currently facing a lawsuit filed by the U.S. Securities and Exchange Commission (SEC), while Tesla has seen weaker earnings in recent quarters.
Furthermore, mining stocks, such as the Valkyrie Bitcoin Miners ETF (WGMI), have also begun to underperform when compared to Bitcoin and MicroStrategy.
From a technical perspective, MSTR appears to be rebounding towards $2,000 after testing its support confluence, which includes its 0.5 Fibonacci retracement level, 50-day exponential moving average (50-day EMA), and a resistance-turned-support ascending trendline.
If the Bitcoin market continues to rally, MicroStrategy’s stock could reach new record highs, potentially outpacing the rise of Bitcoin itself. On the other hand, a pullback in the Bitcoin market could result in a broader correction for MSTR, potentially surpassing BTC losses.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research before making any investment or trading decisions.