MicroStrategy acquired another $2 billion worth of bitcoin (BTC) last week, but it hasn’t helped investors regain last month’s confidence. The premium shareholders place on its stock is at a two-month low, and its share price is 30% off its all-time high from November 21.
MicroStrategy has a small software business, yet most investors calculate its value as a multiple of its BTC holdings. To that end, on November 20, the company owned $31 billion of BTC yet traded at a $106 billion market capitalization — a generous, 3.4X premium.
At publication time, that multiple has declined by one-third to 2.2X.
On November 20, MicroStrategy owned $31B of BTC and traded at a $106B market capitalization.
Over the past three weeks, bullish traders have claimed price targets for MicroStrategy upwards of 10 or even 100 times higher than current prices. Some believe the company can somehow eclipse the value of BTC itself.
There are believers that the company’s dilutive share and debt offerings are accretive on a dilution-adjusted basis — even though most of their calculations exclude some of the company’s future obligations.
As MicroStrategy premium slides, skeptics pile on
Skeptics are as prevalent as optimists, however. Short-seller Andrew Left has bet that the company is overvalued, and many others think the stock exhibits bubble characteristics.
Last week, MicroStrategy used more proceeds of dilutive offerings to acquire 21,550 additional BTC at an average purchase price of $98,783 per coin. The company owns 423,650 BTC, worth $41.5 billion at publication time. Its current market capitalization is $89 billion.
