Shares of MicroStrategy Inc. soared toward a 24-year high on Monday, fueled by the recent rapid run up in bitcoin prices to near-record levels.
A business-analytics software company at heart, investors have treated MicroStrategy’s stock
MSTR,
as more of a digital-asset play, given that it has for years been building its bitcoin
BTCUSD,
pile as its primary treasury asset.
The stock shot up 24% in afternoon trading, to put it on track for the highest close since March 2000.
It has rocketed 92% amid a six-day winning streak. That’s the longest winning streak since the 10-day stretch of gains that ended on Nov. 10, 2023, and the biggest six-day gain since it rose 100.6% over the six sessions ended Feb. 9, 2021, according to Dow Jones Market Data.
The company’s market capitalization has swelled by $10.7 billion over the past six sessions to reach $22.4 billion on Monday.
Last week, Benchmark analyst Mark Palmer became the biggest bull on MicroStrategy’s stock, after he initiated coverage on Feb. 27 with a buy rating and a $990 price target. The stock was already trading about 33% above that target.
Palmer said his Wall Street-high target was based on his assumption that bitcoin will reach $125,000 at the end of 2025. Bitcoin was recently trading up 6.9% at $67,334 according to FactSet, just below its record of $68,990 reached a little more than two years ago.
Bitcoin’s big rally — it has soared 60.4% year to date — comes after regulators approved several spot bitcoin exchange-traded funds, and ahead of the next “halving” that is expected to occur in April.
In MicroStrategy’s latest update on its bitcoin holdings, the company said that it paid $155.4 million to acquire 3,000 bitcoins over the 10-day period ending Feb. 25, for an average price of $51,813 per bitcoin. At current bitcoin prices, the value of those acquired has already increased by roughly $46.6 million.
The company said as of Feb. 25, it held a total of approximately 193,000 bitcoins, which were acquired for about $6.09 billion at an average price of $31,544 per bitcoin. At current prices, the holdings would be valued at about $13 billion.
In MicroStrategy’s post-earnings call with analysts in early February, co-founder and Executive Chairman Michael Saylor said he believed 2024 is the “year of birth” of bitcoin as an institutional-grade asset class.
“And so we’ve now completed the first 15 years of the bitcoin lifecycle. And in that first 15 years, it was largely [an] unregulated retail asset, misunderstood,” Saylor said, according to a FactSet transcript. “The next 15 years, I would expect, will be a regulated institutional, high-growth period of bitcoin.”
Over the past year, the correlation coefficient between MicroStrategy’s stock and bitcoin has been 0.95, according to a MarketWatch calculation of FactSet data. A reading of 1.00 would mean they move perfectly in tandem.
Meanwhile, the correlation between MicroStrategy’s stock and the SPDR S&P Software & Services ETF
XSW,
of which the stock is a component, has been 0.80.
