Based on a recent study, MicroStrategy would have a great chance to increase its financial returns by leasing some of its Bitcoin assets. The strategic purchase of Bitcoin by the firm has been a major determinant of its stock performance; thus, using these resources might help to increase its market worth even more.
Mark Palmer, a benchmark analyst, pointed out that if MicroStrategy keeps buying Bitcoin and starts lending it out to get low-risk returns, its shares may reach $215. Following a 10-for– 1 stock split in August, MicroStrategy’s shares trade currently for $153.
Although MicroStrategy is mostly recognized for its corporate software product, its significant Bitcoin investments have lately been a main factor influencing its market value. Having begun to buy Bitcoin in 2020, the business has amassed a significant sum—now valued at over 252,000 BTC, almost $15.8 billion.
Executive chairman Michael Saylor proposed in a September 18 podcast that Bitcoin may develop into the perfect kind of capital, able to operate as a store of value and a low-risk income source via digital banking operations including lending. Palmer thinks that MicroStrategy’s acquisition strategy supports its present market premium even if some investors have doubts about the company’s valuation.
MicroStrategy promised a new performance metric—based on Bitcoin yield—which gauges the company’s Bitcoin holdings in relation to its outstanding shares during a recent earnings call. This project seeks to underline how well its Bitcoin investment approach performs.
MicroStrategy also just finished a $1.01 billion convertible note sale, used to pay down debt and buy additional Bitcoin. Thanks to this financial move, the business has been able to liberate 69,080 Bitcoins from collateralization, therefore generating greater chances for asset leveraging.
Palmer said MicroStrategy would soon find reliable partners for lending its Bitcoin as institutional custodians proliferate in the United States and interest in cryptocurrency rises among big corporations. The firm may attract big institutional clients with a more favorable SEC regulatory environment, therefore ensuring a far more safe potential of loan returns.
MicroStrategy could be able to provide returns that balance the yearly interest on its debt by lending out its Bitcoin, therefore offering a fresh way for raising its holdings free from further leverage or diluting effects. Reflecting its continuous dedication to maximize its Bitcoin assets, the firm wants to reach a targeted Bitcoin yield of 4% to 8% yearly over the next three years.
Palmer has set a price objective of $215 for MicroStrategy’s shares and has a “buy” rating for the firm, implying that its present trading level is in line for expansion. With its stock growing over 115% year to date, MicroStrategy’s position in the changing bitcoin market might be further reinforced by the possibility for higher profits through Bitcoin lending.
