On Monday, Benchmark analysts maintained a Buy rating on MicroStrategy (NASDAQ:MSTR) stock, with a price target of $650.00. The company, currently valued at over $83 billion in market capitalization, has seen its stock surge more than 438% over the past year according to InvestingPro data.
The company, known for its substantial bitcoin investments, plans to issue $21 billion in equity and fixed income instruments over the next three years, as per its 21/21 Plan announced with its third-quarter 2024 report. The capital raised will be directed towards increasing its bitcoin holdings.
MicroStrategy aims to begin this ambitious financing strategy by entering the perpetual preferred stock market in the first quarter of 2025. The company has set a goal to raise $2 billion through one or more offerings of perpetual preferred stock, contingent on market conditions. This move is an expansion of its capital markets activities, building on its previous issuances of stock and convertible bonds throughout 2024.
The company's strategy has been to leverage its stock price volatility to attract investors to its convertible bonds. With a beta of 3.26 and significant price swings, as highlighted by InvestingPro's analysis, this approach proved successful in November when high demand for its $1.75 billion convertible bond offering led to an upsize to $3 billion, featuring a 0% coupon.
By offering perpetual preferred stock, MicroStrategy plans to reach a different investor base, including insurance companies, pension funds, and banks, which are attracted to these instruments for their fixed dividend payments and lower volatility.
Benchmark's reiterated Buy rating and price target are based on a sum-of-the-parts analysis, which includes the projected value of MicroStrategy's bitcoin holdings by the end of 2026, a 15x multiple of its forecasted FY26E BTC Yield, and the projected value of its software business at the same time.
Analysts believe that MicroStrategy's approach to tapping the perpetual preferred market highlights the shareholder value generated through its treasury operations, supporting the premium at which its stock currently trades over its net asset value (NAV).
InvestingPro's comprehensive analysis reveals the company maintains a moderate debt level with a debt-to-equity ratio of 1.13, though its current ratio of 0.65 suggests some liquidity challenges. For deeper insights into MSTR's valuation and 14+ additional ProTips, explore the detailed Pro Research Report available on InvestingPro.
In other recent news, MicroStrategy has been making significant moves in the financial sector. The company has announced its intention to raise up to $2 billion by offering perpetual preferred stock. This capital is intended to bolster MicroStrategy's balance sheet and allow for the acquisition of more Bitcoin. This is part of a larger plan by the company to raise $21 billion of equity and $21 billion of fixed income instruments over the next three years.
In addition to this, MicroStrategy has been selling shares and using the proceeds to purchase Bitcoin. The company recently sold 592,987 class A common stock shares, raising approximately $209 million. These funds were used to acquire approximately 2,138 bitcoins. Furthermore, Interactive Brokers (NASDAQ:IBKR) has reportedly informed clients of an increase in margin requirements for all MicroStrategy Inc (NASDAQ:MSTR). products due to the company's increased risk profile.
The company has also expanded its board of directors, electing three new members. The new directors bring a wealth of experience and expertise to the table, which will likely be beneficial for the company's future endeavors. These recent developments highlight MicroStrategy's aggressive strategy in the cryptocurrency market and its commitment to strengthening its financial position.
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