On Wednesday, BTIG raised the price target on MicroStrategy (NASDAQ:MSTR) to $570.00 from the previous $290.00, while reiterating a Buy rating on the company's shares. The firm highlighted the strong start to MicroStrategy's "21/21 Plan," which was unveiled on October 31. This ambitious strategy involves raising $42 billion in capital to purchase additional bitcoin.
Since the announcement of the plan, MicroStrategy has successfully raised $6.6 billion through equity and has utilized these funds to acquire 78,980 bitcoins. This addition has increased the company's bitcoin treasury to a total of 331,200 bitcoins. From October 31 to November 17, the company's bitcoin-per-share ratio, also known as its BTC Yield, grew by 20.4%.
Furthermore, on November 20, MicroStrategy priced $2.6 billion of convertible debt, an increase from the $1.75 billion announced on November 18. This debt carries a 0% coupon and a 55% conversion premium. The proceeds are earmarked entirely for the acquisition of more bitcoin, aiming to enhance shareholder value.
BTIG noted the volatility in MicroStrategy's stock as providing advantageous capital raising opportunities, such as the recent $2.6 billion convertible offering. The firm commended the company's management for effectively leveraging market volatility to secure additional fiat capital for bitcoin acquisitions. As of November 17, MicroStrategy's BTC Yield year-to-date was reported at 41.8%.
In other recent news, MicroStrategy Incorporated has made significant strides in its Bitcoin investment strategy. The company recently upsized its private offering of convertible senior notes from $1.75 billion to $2.6 billion, with an option for initial purchasers to buy up to $400 million more in notes within three days of issuance. The offering is expected to close with net proceeds estimated at approximately $2.58 billion, or $2.97 billion if the option for additional notes is exercised in full. MicroStrategy plans to use these proceeds to purchase more Bitcoin and for general corporate purposes.
Furthermore, MicroStrategy has procured an additional 51,780 Bitcoins, funded by a stock offering that generated around $4.6 billion, increasing its total Bitcoin holdings to approximately 331,200. This aggressive acquisition strategy comes despite a reported drop in total software revenues due to a transition to cloud services. However, subscription services are growing, now accounting for 24% of total revenue.
In the wake of these developments, Benchmark recently upgraded its price target on shares of MicroStrategy from $300 to $450, maintaining a Buy rating. The firm's analyst cited the company's unique approach to using Bitcoin as its treasury reserve asset as a key reason for the optimistic outlook.
InvestingPro Insights
MicroStrategy's aggressive bitcoin acquisition strategy, as highlighted in the article, is reflected in the company's recent financial performance and market valuation. According to InvestingPro data, MicroStrategy's market capitalization stands at an impressive $93.1 billion, indicating strong investor confidence in the company's bitcoin-focused approach.
The company's bold moves have not gone unnoticed by the market. InvestingPro Tips reveal that MicroStrategy has seen a significant return over the last week, with a 1-week price total return of 31.11%. This short-term gain is part of a larger trend, as the stock has shown a remarkable 746.64% return over the past year. These figures align with the article's mention of the company's successful capital raising efforts and increased bitcoin holdings.
However, it's important to note that MicroStrategy's aggressive strategy comes with risks. The company is currently trading at a high revenue valuation multiple, and InvestingPro Tips indicate that it's not profitable over the last twelve months. This is consistent with the article's mention of the company's 0% coupon on its recent convertible debt offering, suggesting a focus on growth rather than immediate profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for MicroStrategy, providing a deeper understanding of the company's financial health and market position.
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