MicroStrategy: A Dangerous Gamble (Rating Downgrade)
Summary
- MicroStrategy's valuation is heavily inflated due to its massive Bitcoin holdings, making it a risky bet if Bitcoin prices consolidate.
- Despite bullishness on Bitcoin, MicroStrategy's premium on Bitcoin holdings is unjustified as there are no holding benefits for BTC in a corporate context.
- MicroStrategy's core software business is losing money and the company has heavily increased its share count in the last several years.
- The company’s aggressive capital raises and debt issuance dilute shareholder value, further increasing the investment risk.
- Investors now pay a significant premium to MicroStrategy's Bitcoin holdings that is simply not warranted or justified.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of BTC-USD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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