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Elon Musk is playing with his favorite toy again – the crypto market. Bitcoin resumed its upward curve which was partly attributed to Musk saying Tesla will again accept BTC as a payment method if miners use enough clean energy in their search for new bitcoin. The news drove up BTC-related stocks, including MicroStrategy (MSTR) stocks.
Musk’s power is such that he could perhaps shake the crypto market with just one tweet, but if he remains undecided about Bitcoin, MicroStrategy CEO Michael Saylor has no such reservations. The BTC enthusiast has made it their mission to accumulate as much cryptocurrency as possible.
On Monday, MicroStrategy announced that it has filed a registration with the United States Securities and Exchange Commission to sell shares worth up to $ 1 billion. Previously, the data analytics company revealed that the sale of $ 500 million of senior secured notes has been completed.
And where do you think most of the money will go? More Bitcoin, of course.
MicroStategy has adopted Bitcoin as its primary treasury asset. The company already owns 92,079 BTC, which will now be owned by a newly formed subsidiary, MacroStrategy LLC.
What often gets lost in MSTR’s BTC-related activities is that the day-to-day work of the company is that of an enterprise software vendor, and who should be able to stay out of the water if Bitcoin’s efforts go wrong, as William Blair analyst Kamil Mielczarek noted.
Even if Bitcoin were to fail, MicroStrategy is profitable enough to cover annual interest payments, the analyst said. MicroStrategys core business has the potential to generate $ 100 million per year in short-term free cash flow. During the 12 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 its margins and revenues over the next 12 months.
Mielczarek rates the MSTR share as an outperformance (i.e. a buy), although the analyst does not have a fixed price target for the shares. (To see the Mielczareks prize list, click here)
The story continues
Based on Wall Street’s average price target of $ 690, MSTR stock is expected to rack up an additional 11% gains over the next 12 months. Based on 3 buys and 1 hold and sell each, the stock has a moderate buy consensus rating. (See the analysis of MSTR shares on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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