Bernstein last night initiated coverage last night of MicroStrategy (MSTR) with an Overweight rating and $2,890 price target, which represents 80% upside. The firm also revised up its bitcoin price expectation to $200,000 by 2025 versus $150,000 previously. This is led by “unprecedented” bitcoin demand via exchange traded funds run by world’s leading asset managers, and bitcoin supply being constrained, the analyst tells investors in a research note. Bernstein’s base case estimates are bitcoin at $200,000 by the end of 2025, $500,000 by 2029 and $1M by 2033. The firm values MicroStrategy at a 50% premium to its bitcoin net asset value by 2025. The company has transformed from a small software company to the largest bitcoin holding company, owning 1.1% of world’s bitcoin supply worth $14.5B, according to the analyst. Bernstein believes the stock deserves to trade at a premium over market value of its bitcoin since it is positions itself as an “active-leveraged” bitcoin strategy verses passive spot ETFs. Over the last four years, MicroStrategy’s active strategy has delivered a higher bitcoin per equity share, the firm says. It believes the company’s long term convertible debt strategy allows it enough time to gain from bitcoin upside, with limited liquidation risk to its bitcoin on balance sheet. Shares of MicroStrategy are up 1%, or $14.98, to $1,498.86 in premarket trading.
