On Wednesday, Bernstein maintained its Outperform rating on shares of MicroStrategy Incorporated (NASDAQ:MSTR) with a price target of $600.00. According to InvestingPro data, analyst targets for MSTR range from $212 to $650, with a strong consensus recommendation of 1.33 (Strong Buy).
The firm highlighted the potential benefits of MicroStrategy's inclusion in the Nasdaq100 index, which could lead to significant one-time buying and ongoing market participation due to the company's presence in major ETFs such as QQQ.
The analyst noted that Bloomberg Intelligence reported on the possibility of MicroStrategy joining the Nasdaq100. This move is anticipated to attract around $2.1 billion in fresh buying based on a 0.47% weight. Such an event would increase the company's visibility and recognition in the financial markets.
MicroStrategy has recently intensified its Bitcoin acquisition strategy, purchasing approximately $16 billion worth of Bitcoin in the past 40 days, which accounts for 40% of its total Bitcoin holdings.
The company's stock has seen a rapid increase in value post-elections, with InvestingPro data showing an impressive 497% return year-to-date. This remarkable performance, combined with the stock's high volatility (Beta of 3.2), prompts questions about the sustainability of its current valuations.
The potential inclusion in the Nasdaq100 is seen as a prelude to the possibility of MicroStrategy being considered for the S&P 500 index by 2025. The current profitability of its software business presents a challenge for S&P 500 inclusion.
However, the adoption of new mark-to-market accounting standards by the Financial Accounting Standards Board (FASB), which will be effective in 2025, could allow MicroStrategy to recognize unrealized gains on its Bitcoin investment. The company's Bitcoin holdings have a market value of approximately $41 billion against a cost basis of around $25 billion, which could bolster its case for inclusion in the S&P 500.
In other recent news, MicroStrategy Incorporated disclosed significant financial activities, including the sale of class A common stock and the acquisition of additional bitcoins. The company sold approximately 5.42 million shares, resulting in net proceeds of around $2.13 billion.
MicroStrategy used these proceeds to purchase approximately 21,550 bitcoins at an average price of about $98,783 per bitcoin, bringing the company's total bitcoin holdings to approximately 423,650 bitcoins.
Furthermore, MicroStrategy is being considered for inclusion in the Nasdaq 100 index, an acknowledgment of its substantial market presence. Bloomberg Intelligence identified MicroStrategy as one of the companies likely to be added to the index.
Analyst firms such as Barclays (LON:BARC) and Benchmark have raised their price targets for MicroStrategy shares, maintaining their positive ratings on the stock. Canaccord Genuity, BTIG, and Benchmark have also maintained a Buy rating on the company's stock.
MicroStrategy's recent activities underscore its ongoing commitment to its Bitcoin investment strategy. The company has been leveraging its share issuance capability to expand its cryptocurrency portfolio, reflecting the successful execution of its Bitcoin-oriented approach. These are recent developments that investors should take into account.
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