According to a research report published on Tuesday by broker Bernstein, MicroStrategy (MSTR) is not simply a software company expanding its corporate treasury into cryptocurrency—it is also leading the way in the bitcoin (BTC) capital markets.
“MSTR is the only corporate that has developed institutional demand for bitcoin linked convertibles,” analysts Gautam Chhugani and Mahika Sapra wrote.
According to the broker, MicroStrategy has obtained $4 billion in convertible debt to far with the sole intention of purchasing additional bitcoin. One kind of financial instrument that can be changed into shares is a convertible bond. Presently, Michael Saylor’s company owns 214,400 bitcoin, which is valued at almost $14.5 billion. In 2020, it began purchasing cryptocurrencies as a reserve asset.“No other corporate has an active bitcoin investing strategy that can attract capital at scale,” the authors wrote.
According to the report, MicroStrategy has sufficient time to profit from any future bitcoin gains and has no danger of liquidating the cryptocurrency on its balance sheet because of its long-term convertible debt plan. According to Bernstein, the Virginia-based corporation can issue additional shares to reduce leverage when the value of bitcoin declines and there is less room to issue new debt.MicroStrategy’s bitcoin per equity share has increased by around 67% over the previous four years thanks to this combination of debt and equity, according to the study.Bernstein points out that since MicroStrategy began purchasing bitcoin in 2020, the company has not sold any of the cryptocurrency, and the firm plans to continue raising money to increase its holdings.
The broker has an outperform rating on MicroStrategy stock with a $2,890 price target. The shares erased a drop of as much as 2.5% to trade little changed around $1,509.