For Bitcoin enthusiasts, the countdown is almost over. Around April 20, the new supply of bitcoins generated via mining is set to get slashed in half. This is an event that is written into the software and takes place once every four years. Following each of the previous halvings, Bitcoin has exploded in value over the next year and a half or so. With this catalyst about to hit, Benchmark analyst Mark Palmer expects that by the end of 2025 one Bitcoin will be worth $150,000, more than double its current price.
So, plenty to look forward to for BTC supporters. And what’s good for Bitcoin is also good for MicroStrategy (NASDAQ:MSTR).
Led by Bitcoin crusader Michael Saylor, the company, while still running its enterprise software business, has made purchasing as much Bitcoin as possible its primary target, often using capital raises to fund its purchases. As such, says Palmer, “We view MSTR, a levered play on bitcoin, as particularly well positioned to benefit from an upcoming catalyst: the fourth bitcoin halving, set to occur on or about April 20, when the new supply of bitcoin will be reduced by half.”
Accordingly, Palmer reiterated a Buy rating on MSTR shares and raised his price target to a new Street-high of $1,875 (up from $990), suggesting the stock has room for growth of ~32% from current levels. (To watch Palmer’s track record, click here)
That new price target is based on Palmer’s high expectations for Bitcoin’s price trajectory. With MSTR being the owner of so much BTC, it’s a simple equation: a higher Bitcoin price means more value to MSTR’s holdings, and that means more value to shareholders. And utilizing the proceeds from capital markets transactions and surplus cash generated by its enterprise software business, Palmer anticipates the company will keep on buying more Bitcoin.
“We estimate that MSTR will have amassed 298,246 bitcoins by YE25, up from the 214,246 bitcoins it held as of March 19,” Palmer explained. “We note that the company has increased its bitcoin holdings for 15 consecutive quarters.”
Although there have been discussions recently regarding the perceived premium at which MSTR shares trade compared to the company’s net asset value (NAV), Palmer thinks there are several factors that support the rationale for the stock to maintain such a premium. The main being MSTR’s proven capability to access capital markets at highly favorable interest rates, as evidenced by the two convertible debt offerings in March with coupons of 0.625% and 0.875%. These have enabled the company to subsequently invest the proceeds in acquiring more bitcoins.
Turning now to the rest of the Street, where the Benchmark view gets strong support. While only 3 other analysts have recently waded in with MSTR reviews, all are positive, making the consensus view here a Strong Buy. At $1,733 and change, the average price target implies shares will climb ~22% in the year ahead. (See MSTR stock forecast)
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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.
