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Investing.com -- Mizuho initiated coverage on MicroStrategy with an Outperform rating and a $515 price target on Wednesday, citing its unique corporate structure and strong correlation with Bitcoin price appreciation.
“MSTR Stock Benefits from Bitcoin Price Appreciation; We Expect Bitcoin To CAGR at 25-30% through 2027, albeit with Extreme Volatility,” said the firm.
MicroStrategy’s strategy revolves around raising capital through debt and equity issuances to accumulate Bitcoin, with the goal of growing its Bitcoin holdings per diluted share.
Mizuho (NYSE:MFG) notes that MSTR currently trades at a ~75% premium to the underlying value of its Bitcoin holdings, leveraging this valuation premium to issue convertible bonds and equity at favorable terms. This structure enables the company to accrete Bitcoin per share at a faster rate than its share dilution.
The firm highlights MicroStrategy’s 21/21 Plan, which aims to raise $21 billion each in debt and equity by 2027 to acquire more Bitcoin.
“We believe favorable market conditions put MSTR on a fast track to exceed targets (already raised $3bn/$18bn of debt/equity since October announcement,” added the firm.
Mizuho’s valuation model assigns a 1-2x EV/revenue multiple to MSTR’s software business ($750 million), a 9x multiple to its Bitcoin treasury operations ($61 billion), and assumes Bitcoin holdings of 783,000 at a projected $166,000 per BTC in 2027 ($130 billion total value).
“At an estimated 374mn fully diluted shares, this implies base case equity value per share of $515,” writes Mizuho.
While the firm acknowledges Bitcoin’s extreme volatility and lack of intrinsic value, it believes rising adoption, a finite supply, and a favorable political environment under President Trump will drive significant upside for MSTR.