<a href="https://www.world-today-news.com/full-of-uncertainty-bitcoin-even-predicted-soon-us-20-thousand-blockchain-media-indonesia/" title="Full of Uncertainty, Bitcoin Even Predicted Soon US $ 20 Thousand – Blockchain Media Indonesia”>MicroStrategy was once a model company in the area of business intelligence and software. But times have changed. Since CEO Michael Saylor‘s Bitcoin strategy, the company’s valuation has ballooned to levels that are sporting, to say the least. The question investors should be asking themselves now: Is MicroStrategy still a software company or just a glorified Bitcoin bet?
The two faces of MicroStrategy
The company essentially consists of two parts: a software division and a Bitcoin division. The software department is still generating revenue, but is on the decline. Sales fell 7% in the most recent quarter compared to the previous year. Not exactly what you can sell as a growth story.
But the Bitcoin bet is even more spectacular. MicroStrategy has been buying Bitcoin on a large scale since 2020 and now has over 252,000 coins on its books. This massive Bitcoin horde has brought the company a lot of attention and a decent boost in its share price. Sounds good at first, right?
Overrated – but why?
A look at the numbers shows that investors are currently paying a decent premium for MicroStrategy shares. The software division could be valued at around $1.87 billion if one were to look at other, weakly growing software companies. Bitcoin holdings are worth about $17.7 billion at a price of $70,000 per Bitcoin.
So far so good. But this is where the problem begins: MicroStrategy’s current market capitalization is just under $40 billion. That means investors are paying a 180% premium over fair value when you add up Bitcoin holdings and the shrinking software business.
MicroStrategy share chart
Why the surcharge?
MicroStrategy’s overextended price reflects the belief that Bitcoin will be worth significantly more in the future. To justify the current share price, the Bitcoin price would have to rise to around $174,000 per coin. Sounds ambitious? It is too. Of course, Bitcoin can explode, but it is questionable whether you should rely on a company that finances its coins primarily through debt. The company is now sitting on around $5.2 billion in debt, further increasing the risks for shareholders. The company effectively acts like a Bitcoin leveraged product, with the difference that investors pay a decent premium for the shares.
MicroStrategy shares: buy or sell?! New MicroStrategy analysis from October 20 provides the answer:
The latest MicroStrategy figures speak for themselves: Urgent need for action for MicroStrategy shareholders. Is it worth getting started or should you sell? In the current free analysis from October 20th you will find out what to do now.
MicroStrategy: Buy or sell? Read more here…
