Not Just a Bitcoin Play

Elon Musk is working on his favorite toy again – the crypto market. Bitcoin has resumed its upward trajectory, in part because Musk said Tesla will accept BTC again as a payment method should miners use enough clean energy in their quest for new bitcoins. The news sent BTC-related stocks up, including those of MicroStrategy (MSTR).

Musk’s power is so great that he could potentially move the crypto market with a single tweet, but if he remains undecided about Bitcoin, MicroStrategy CEO Michael Saylor has no such reservations. The BTC enthusiast has made it his company’s job to hoard as much of the cryptocurrency as possible.

On Monday, MicroStrategy announced that it had filed a shelf registration with the Securities and Exchange Commission to sell up to $ 1 billion worth of stocks. The data analytics firm previously announced that it had completed the sale of $ 500 million senior secured notes.

And where do you think most of the money will go? More bitcoin, of course.

MicroStategy has adopted Bitcoin as its primary asset. The company already owns 92,079 BTC, which is now held by a newly formed subsidiary, MacroStrategy LLC.

What is often lost in MSTR’s BTC-related endeavors is that the company’s primary role is to be an enterprise software provider that should be able to stay afloat should the Bitcoin endeavor go wrong as the analyst William Blair noted Kamil Mielczarek.

“Even if Bitcoin should fail, MicroStrategy is sufficiently profitable to cover the annual interest payments,” said the analyst. “MicroStrategy’s core business has the potential to generate $ 100 million per year in free cash flow in the short term. For the twelve months ended March 31, 2021, the company generated $ 106 million in free cash flow and $ 84 million in non-GAAP operating income. We expect the company to increase margins and sales over the next 12 months. “

Mielczarek rates MSTR stock as outperforming (i.e. buying), even though the analyst has no fixed price target for the stock. (To see Mielczarek’s track record, Click here)

After Wall Street’s average target price of $ 690, MSTR stock is expected to generate an additional 11% of earnings over the next 12 months. Based on 3 buys and 1 hold and a sell, the stock has a consensus rating of Moderate Buy. (See MSTR stock analysis on TipRanks)

To find great ideas for trading stocks at attractive valuations, visit TipRanks’ The best stocks to buy, a newly introduced tool that brings together all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the presented analyst. The content is provided for informational purposes only. It is very important that you do your own analysis before making any investment.

Comments are closed.