tiprankstipranks
MicroStrategy: Concerns Around Margin Call Are FUD, Says Michael Saylor
Stock Analysis & Ideas

MicroStrategy: Concerns Around Margin Call Are FUD, Says Michael Saylor

Say Michael Saylor and the description “bitcoin evangelist” naturally follows. It’s well-known the MicroStrategy (MSTR) CEO is a huge BTC proponent and has been stacking sats to the high heavens.

In fact, to such an extent that following the recent bearish developments in the crypto space and bitcoin’s alarming descent, there have been concerns around the possibility MicroStrategy will face a margin call on a recently issued, bitcoin-backed term loan.

But following investor meetings with investment bank BTIG, firm analyst Mark Palmer said that instead of it being a valid concern, Saylor dismissed the “margin call hubbub” as another example of the famous crypto expression: FUD – fear, uncertainty, and doubt.

“Saylor during the meetings elaborated on the statement he made via Twitter that the company would need to maintain $410mm in bitcoin as collateral underpinning the $205mm loan, and that it had 115,109 bitcoins available to shore up that collateral as needed such that any qualms regarding a margin call were plainly unwarranted,” Palmer further explained.”

Furthermore, company President Phong Le added that the late March $205 million, three-year bitcoin-backed loan from Silvergate Bank was the sole instrument in its capital structure with any sort of covenant which could activate a margin call. The remaining $2.2 billion of debt have no such clauses in the loan agreements.

With that issue out of the way, Saylor and Le were asked about “other potential near-term triggers” that could force the company to offload a chunk of the 129,218 bitcoins it held as of the end of the first quarter. For someone who has declared they will never sell their BTC holdings, there’s fat chance of that happening. “No such triggers are present in the company’s debt maturity profile, they responded,” Palmer confirmed, “as its maturities ranged from March 2025 to June 2028.”

To this end, Palmer reiterated a Buy rating on MSTR stock backed by a $950 price target. The implication for investors? Upside of a huge 379%. (To watch Palmer’s track record, click here)

There are currently two other analyst reviews on file, and both are positive, providing this name with a Strong Buy consensus rating. The average price target is a bullish one; at $701.5, the figure represents possible 12-month upside of ~254%. (See MicroStrategy stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles