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Bitcoin’s Apr. 20 halving and strong demand from BTC ETFs could give the MicroStrategy share price a substantial boost as the company is well positioned to benefit, said broker Benchmark.
Benchmark increased its price target for MicroStrategy (MSTR) from $990 to $1,875, while also maintaining a buy rating for the company. The elevated target is based on the assumption that BTC will reach $150k by the end of 2025, an increase from an earlier estimate of $125k.
The MSTR price responded positively to the report, surging more than 5% in the last 24 hours to trade at $1,512.99 as of 2:50 a.m. EST.
“While the upcoming bitcoin halving will create a supply shock as the previous ones had, we believe the event’s impact could be magnified by the concurrent demand shock created by the emergence of spot bitcoin exchange-traded funds (ETFs),” said analyst Mark Palmer. “We expect inflows into spot bitcoin ETFs to grow dramatically once institutions begin to invest in them in earnest.”
MicroStrategy is expected to increase its BTC reserves in coming weeks, using proceeds from capital market transactions, Benchmark said.
Extra cash generated by its software business will also be used to buy more BTC, said the report. Benchmark predicts the company will hold 298,246 BTC by the end of 2025, up from 214,246 coins held as of Mar. 19.
MicroStrategy Share Price “Unjustifiable”
Not everyone is bullish towards MicroStrategy’s share price. Investment firm Kerrisdale Capital said in a Mar. 28 research note that MSTR is priced “exceptionally high,” and called its valuation “unjustifiable.”
Kerrisdale Capital’s short position in #MicroStrategy ($MSTR) about to feel the squeeze!!! Don’t jump in front of a freight-train 🚆 pic.twitter.com/s7c9Mf0Kv6
— InvestAnswers (@invest_answers) April 4, 2024
Investors have inflated the company’s premium as a result of its BTC holdings, said the firm. With the majority of this BTC purchased through debt financings, equity linked convertible notes and ATM equity offerings, Kerrisdale Capital argues that calling the company’s use of leverage to purchase BTC “intelligent” is flawed logic.
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