MicroStrategy (MSTR) Ambitious Capital Plan Effect To Watch

$MicroStrategy(MSTR)$ is scheduled to report the fourth-quarter earnings for 2024 on 05 Feb 2025 after market close.

If we looked at how MSTR have performance in its previous few quarter, the third-quarter did show some strong cloud revenue growth in non-GAAP subscription billings grew 93% year-over-year to $32.4 million, with strong demand for cloud offerings.

And there is also success in its convertible bond strategy which have outperformed bitcoin, providing investors with a favorable return.

MSTR’s bitcoin holdings stood at 471,107 bitcoins as of 02 Feb, unchanged from the prior week, based on company filings with the Securities and Exchange Commission.

But question remain whether MSTR could keep its cloud subscription billings high as analysts expect MicroStrategy to report a loss per share of $0.09 for Q4 2024 compared to an EPS (earnings per share) of $0.50 in the prior-year quarter.

MicroStrategy (MSTR) Previous Positive Earnings Call Give 40.35% Change Since

MSTR have seen a 40.35% change to its share price after the last earnings call on 30 Oct 2024 which give a positive sentiment, because it presented a strong focus on expanding bitcoin holdings and capital strategy, with significant progress in cloud revenue growth. However, declines in software revenue and increased operating expenses pose challenges.

One thing we need to be aware is whether the convertible bond strategy can continue to outperform Bitcoin as MSTR’s bitcoin holdings stood at 471,107 bitcoins as of 02 Feb.

MicroStrategy (MSTR) Ambitious 21-21 Capital Plan To Watch

During the Q3 2024 earnings call, MicroStrategy provided ambitious guidance with the introduction of their 21-21 capital plan, targeting to raise $42 billion from 2025 to 2027, split evenly between equity and fixed income capital, primarily for acquiring bitcoin.

The company, already the largest corporate holder of bitcoin with 252,220 bitcoins valued at $18 billion, aims to further cement its position as the largest bitcoin treasury company. Additionally, MicroStrategy's software business showed strong growth, with non-GAAP subscription billings increasing by 93% to $32.4 million, driven by cloud migrations.

The company plans to continue leveraging its balance sheet, with a positive BTC Yield target of 6% to 10% annually for the next three years, showcasing its commitment to long-term shareholder value creation through its dual focus on bitcoin acquisition and enterprise analytics.

MicroStrategy continued to hold the largest Bitcoins holdings of 471,107 so as long as Bitcoin could stay range-bound around $100,000, this might be able to help MSTR to gain.

In the third-quarter, MicroStrategy raised $1.1 billion through an ATM equity offering and $1.01 billion through convertible notes, freeing all bitcoin holdings from encumbrances.

In the third-quarter, MicroStrategy announced a plan to raise $42 billion from 2025 to 2027 to acquire bitcoin, with a new $21 billion ATM equity program filed.

With MSTR just pulled off another bold financial move, raising $563.4 million through an offering of 7.3 million convertible preferred shares at $80 each, how will the ambitious capital market strategic plan played out?

MicroStrategy (MSTR) Price Target - Current Price Is Way Below

Based on 9 Wall Street analysts offering 12 month price targets for Microstrategy in the last 3 months. The average price target is $557.50 with a high forecast of $650.00 and a low forecast of $510.00. The average price target represents a 60.62% change from the last price of $347.09.

If we looked at how the price target have been set for MSTR, it is actually trading below the average price target with a 60% change.

So we will need to see how MSTR would be making use of the convertible bond strategy to help its revenue, then with Bitcoin price fluctuating around $100,000, and Trump has announced the creation of sovereign fund, which might be used to buy and hold Bitcoin.

So will these factors eventually helped MSTR?

MicroStrategy (MSTR) Next Revenue Stream To Look Out - MicroStrategy ONE®

MicroStrategy offers AI-powered enterprise analytics software and services. On 30 January, the company announced the latest release of MicroStrategy ONE®, a business intelligence platform that allows enterprises to gain rapid value from generative AI (GenAI) by personalizing the AI experience for each user.

The company’s Auto AI bot enables a human-like conversational experience for users interacting with data. With the latest release, Auto will better understand ambiguous questions using context and past user interactions, as well as provide direct feedback which will allow Auto to tailor future responses. Moreover, there are more granular controls for developers and partners who wish to deploy AI bots within their applications.

This might be a move by MSTR to be in the race for AI, as MSTR is still a software house, and this might be something that could suit what the AI revolution is looking for, as LLM is kind of open-sourced, it is the platform which allows developers to work on development.

Technical Analysis - Exponential Moving Average (EMA)

If we looked at how MSTR have been trading recently from mid-Jan, the bulls are trying to create a daily uptrend but it has failed as the shares keep staying range-bound around $340.

We saw a dip yesterday as the Bitcoin experienced a decline to below $95,000 at one time, so the bulls would continue to make an attempt to make another uptrend, especially when the 12-EMA and 26-EMA is close creating a support and resistance which is around $340.

So it would be interesting to see MSTR going above $340 and staying above it before we could see MSTR going near $400 again.

I do hold a position on MSTR and would be adding more as the price near $340 looks to be quite promising and $CME Bitcoin - main 2502(BTCmain)$ could experience another rally soon after Trump is done with tariffs.

Summary

I think as investor in MSTR, we need to ask ourselves this question will Micro Strategy continue to track Bitcoin's moves, or is the market starting to treat it differently?

This is because MSTR’s Bitcoin bet remains one of the boldest plays in corporate finance, which I would think that investors cannot afford to ignore.

Appreciate if you could share your thoughts in the comment section whether you think MSTR would provide an earnings surprise because of a more positive capital plan gain.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.

# 💰 Stocks to watch today?(14 Feb)

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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