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MicroStrategy (NASDAQ:MSTR) is a development inventory with an uncommon historical past. It began life as a software program firm however in late 2020, it started shopping for cryptocurrency as a way of shoring up its stability sheet. It now claims to be the “largest corporate holder of Bitcoin in the world”.
And it seems to have caught the eye of many buyers on each side of the Atlantic.
Of the 11 US analysts masking the corporate, 10 think about it a Purchase.
Nearer to house, through the week ended 3 January, it was the preferred inventory with Hargreaves Lansdown’s shoppers. Of all that week’s purchases on the platform, MicroStrategy noticed essentially the most exercise, each when it comes to trades (3.21%) and the worth of offers positioned (5.04%).
An prolonged bull run
Not surprisingly, this curiosity has helped drive its value greater.
Since January 2024, it’s elevated by 470%.
And this spectacular efficiency reveals no indicators of slowing down. Helped by the prospect of a second Trump presidency (he’s seen as being extra pro-crypto than Joe Biden) through the first eight days of 2025, the inventory’s up 18%. Previous efficiency just isn’t an indicator of future efficiency although, after all.
However a better take a look at the statistics is revealing.
Though it was the post-Christmas primary with Hargreaves Lansdown’s patrons, it was additionally standard with sellers, accounting for 4.55% of all trades.
This could possibly be an indication that the inventory’s being purchased with a view to creating a fast revenue, quite than for its long-term development prospects.
It may additionally clarify why it’s essentially the most unstable inventory on the S&P 500. Though its achieved effectively in 2025, I believe it’s price noting that it’s fallen 28% from its November 2024 peak.
Seeking to the longer term
However the firm does have a development technique, albeit a easy one. It plans to purchase extra Bitcoin, and many it.
Over the subsequent three years, it hopes to buy $42bn of the digital asset.
Nevertheless, on condition that MicroStrategy’s software program enterprise isn’t money generative — through the 9 months ended 30 September 2024, it reported a post-tax lack of $48m — all the funds must come from a mix of debt ($21bn) and fairness ($21bn).
And so long as Bitcoin doesn’t crash, I’m certain every little thing might be okay. In any other case, I worry it’ll be catastrophic for the corporate and its shareholders.
The content material on this article is offered for info functions solely. It isn’t supposed to be, neither does it represent, any type of funding recommendation. Bitcoin and different cryptocurrencies are extremely speculative and unstable belongings, which carry a number of dangers, together with the entire lack of any monies invested. Readers are chargeable for finishing up their very own due diligence and for acquiring skilled recommendation earlier than making any funding choices.
Leverage
Newest experiences counsel that the corporate at present owns 447,470 Bitcoin, price roughly $43bn. Its market cap is $84bn — 95% greater.
In different phrases, buyers are pleased to pay extra for the Bitcoin held by MicroStrategy than in the event that they purchased it immediately themselves.
To my shock, this implies its share value has outperformed the worth of the cryptocurrency over the previous 12 months by an element of 4.
This doesn’t seem sustainable to me.
And it means that if the worth of Bitcoin falls, the inventory market valuation of MicroStrategy will crash by much more.
Personally, I don’t wish to add this stage of danger (or volatility) to my share portfolio. I’m due to this fact going to keep away from MicroStrategy, regardless of the hype surrounding the inventory.
