In a research report released on Monday, broker Canaccord Genuity stated that MicroStrategy (MSTR), which collected over $1.5 billion in the first quarter, utilized the money to purchase an extra 25,250 bitcoin (BTC). As a result, MSTR currently has 214,400 BTC, which is valued at approximately $13.6 billion.Purchasing and holding bitcoin is a component of MicroStrategy’s company strategy.The company owns about 1% of the 19.7 million tokens that are now in circulation for bitcoin.
As it shifted its operations to the cloud, the software company saw double-digit revenue growth from subscription services in the first quarter, according to the article.The company claimed in a press release on Monday that after taking a $191.6 million charge for digital asset impairment, it still posted a net operational loss of $53.1 million.
Due to the first quarter’s surge in bitcoin prices, the company had the option to report a sizable profit and implement the new digital asset fair value accounting standard. However, it chose not to do so.Canaccord kept its buy recommendation on MicroStrategy but lowered its price target from $1,810 to $1,590.In after-hours trading, the stock fell 2.5% to $1,261.
“The main drivers are of our new price target are continued appreciation of BTC and some revaluation up for the software business,” analysts led by Joseph Vafi wrote, adding that “given MSTR’s current premium to its BTC holdings, we are not assuming this to be an upside driver from current levels.”
“We note that the current 71% equity value premium to the HODL is still quite significant, and thus contraction here should be viewed as a risk factor,” the authors wrote.
There is a scarcity value to MicroStrategy’s bitcoin holdings, given it remains one of the best ways for most equity investors to gain exposure to the digital asset, Canaccord said, and this setup “provides the potential for an additional premium to spot to re-emerge in MSTR shares.”
The setup for bitcoin is also positive.“BTC is biased higher given recent approvals of U.S. BTC spot exchange-traded funds (ETFs) coming from heavyweight asset managers and the very strong adoption there combined with the recent BTC halving,” the report added.