MicroStrategy Trading At 'Insane' 256% Premium To Bitcoin Holdings, Research Shows

Benzinga11-22 22:11

MicroStrategy Incorporated MSTR is trading at an astonishing 256% premium to the net asset value (NAV) of its Bitcoin BTC/USD holdings, according to research conducted by BitMEX. The analysis ...

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These people are so desperate for Bitcoin exposure, they buy MSTR instead, despite the premium,\" BitMEX Research stated.\nAlso Read: Strategic Bitcoin Reserve Wouldn’t Require New Taxpayer Dollars, Says Sen. Cynthia Lummis\nBreaking Down the Numbers\nMicroStrategy currently holds 331,200 bitcoin, valued at approximately $32.3 billion, assuming a Bitcoin price of $97,600.\nHowever, with a fully diluted market cap of $115 billion and a share price of $474, the company's valuation significantly exceeds its Bitcoin holdings. \nThis disparity reflects an implicit bet by investors on the company's ability to leverage its premium for further Bitcoin acquisitions.\nBitMEX Research explored scenarios where MicroStrategy could theoretically align its Bitcoin per share value with its current trading price of $474, assuming the Bitcoin price remains constant at $97,600 and the premium persists. \nUnder these conditions, MicroStrategy would need to:\n\nIssue 157 million additional shares, raising $157 billion.\nAccumulate 1.9 million Bitcoin in total holdings.\nReach a market capitalization of $674 billion, with a share price climbing to $1,685.\n\nThis iterative calculation assumes the company continues issuing new equity at a premium to acquire more Bitcoin, a strategy MicroStrategy has employed since 2020. \n\"If the premium persists, the company can keep issuing new shares until the value of the Bitcoin per share equals the current share price,\" BitMEX Research added.\nPremium Justified By Strategy?\nWhile some argue that the premium reflects investor enthusiasm for indirect Bitcoin exposure, others view it as a speculative bubble. \nBitMEX Research emphasized that the premium may only remain sustainable if investors continue to believe in MicroStrategy's yield strategy. \n\"At that point, with a $1,685 share price, people may need to think the premium will still remain for another round of this,\" the analysis stated.\nThe company's holdings position it as a major Bitcoin proxy, the 256% premium suggests that investors are paying a significant markup for exposure, far exceeding the actual value of its Bitcoin.\nRead Next: \n\nGary Gensler To Step Down As SEC Chair On Trump’s Inauguration Day\n\nImage: Shutterstock Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485694862"}