Business intelligence and software firm MicroStrategy continues to move from strength to strength, primarily on the back of its huge gamble on Bitcoin. Moreover, investors have seen huge returns in stocks for the firm this year as crypto markets recover.
This year, MicroStrategy has been one of the biggest gainers in the US among companies valued at $5 billion or more in terms of share prices.
MicroStrategy Bitcoin Bet Pays Off
On Dec. 26, CNBC reported that unlike its tech peers, which rely on revenue growth and market share gains to fuel their stock prices, “MicroStrategy’s investor appeal is almost exclusively due to Bitcoin.”
Moreover, MicroStrategy stock has surged 317% so far this year, far outpacing Bitcoin, which has gained just 156%. According to MarketWatch, MSTR was trading at $605 in after-hours on December 26.
It has even outperformed tech giants such as Nvidia, Meta, Apple, Microsoft, and Google.
BTC is the secret to the firm’s success. It began buying the crypto asset in mid-2020 and has since amassed roughly 174,530 BTC. This is the largest corporate stash of Bitcoin valued at around $7.36 billion.
Stock analyst Joseph Vafi told the outlet, “It’s really Bitcoin,” before adding:
“All the other stuff is healthy and doing a good job, they’re not neglecting it. It’s doing well, it’s leading software in its sector. But it’s basically something we don’t have to worry about.”
Read more: What Is Dollar-Cost Averaging (DCA)?
Moreover, MicroStrategy’s market cap is $8.5 billion, meaning 86% of its value is tied directly to its BTC holdings.
Former CEO Michael Saylor created a way for investors to get exposure to BTC without having to buy it directly.
Vafi described Saylor as “a kind of a visionary,” before adding:
“He saw this as an opportunity to really exploit the fact that they had a lot of cash and a pristine balance sheet and start this Bitcoin treasury experiment. And it’s worked out well and so they’re continuing down that path.”
ETF Competition?
However, if the raft of spot Bitcoin ETFs get approved in January, they may pose competition to MicroStrategy’s model.
Nevertheless, Vafi sees it as a good thing since ETFs will push the price of BTC higher, which is great news for MicroStrategy.
Last week, Saylor said the potential approval of a spot Bitcoin ETF may be the biggest Wall Street development in 30 years.
Additionally, the firm has no intentions of slowing its accumulation of Bitcoin. In November, it made its largest purchase since 2021 with an additional 16,130 BTC for about $593 million.
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