MicroStrategy’s shares surged 58% in November, driven by Bitcoin’s rising prices and Donald Trump’s electoral win. However, after a 20% pullback, the stock is still up an impressive 502% in 2024. The company continues to focus on Bitcoin, recently announcing a plan to raise $21 billion for further purchases. Despite this optimism, investor Hataf Capital warns against investing in MicroStrategy, citing that shareholders effectively pay $245,000 for each Bitcoin, far above its Market value. Hataf also highlights potential tax implications and shareholder dilution from the company’s fundraising. Meanwhile, Wall Street remains bullish with a Strong Buy consensus for MicroStrategy, suggesting a potential 30% upside in the next year. Always conduct thorough research before investing.
MicroStrategy (NASDAQ:MSTR) has seen its shares soar by 58% in November, thanks largely to a recent surge in Bitcoin’s price and excitement around Donald Trump’s electoral victory. Despite a 20% dip since November 20, MSTR’s stock is up an impressive 502% this year.
The company appears to remain firmly committed to Bitcoin, recently unveiling its “21/21 plan,” which aims to raise $21 billion through both debt and equity to fund further Bitcoin purchases.
But should investors be buying MSTR stocks? One investor, Hataf Capital, warns against it. Hataf highlights a significant issue: investors are paying an astonishing $245,000 for each Bitcoin through MSTR, which is a 156% premium over the current Bitcoin Market price of $95,600. This means that for every dollar put into MSTR, investors are only getting about 39 cents of actual Bitcoin exposure.
Hataf also raises concerns about MicroStrategy being a C Corporation, which means profits from its Bitcoin strategy will be taxed at the corporate level. This would lead to additional capital gains taxes for shareholders when they sell their shares.
Concerns grow with the potential impact of the 21/21 plan. Hataf suggests that raising $21 billion in equity could dilute the value for existing shareholders, and taking on such a large amount of debt could result in hefty interest payments.
For those looking to invest in Bitcoin, Hataf advises considering direct Bitcoin purchases or tax-efficient ETF alternatives, rather than MSTR. Despite Hataf’s concerns, Wall Street seems optimistic, with a Strong Buy consensus for MSTR based on 8 Buy recommendations and a 12-month price target suggesting a 30% increase from current levels.
For more insights and investment ideas, you might want to check out TipRanks’ Best Stocks to Buy tool.
Disclaimer: The views expressed in this article are those of the featured investor and are meant for informational purposes. Always conduct your own research before making any investment decisions.
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What does "Time to Jump Ship" mean for MicroStrategy stock?
It means that some investors think it’s a good idea to sell their shares in MicroStrategy instead of holding on to them. -
Why are investors saying this about MicroStrategy?
Investors may be worried about the company’s performance or its reliance on Bitcoin, which can be very unstable. -
Should I sell my MicroStrategy stock now?
It’s important to do your own research or talk to a financial advisor before making any decision about selling your stocks. -
What factors are affecting MicroStrategy’s stock price?
Factors include Market trends, Bitcoin prices, company earnings reports, and overall investor sentiment. - Can MicroStrategy improve its stock situation in the future?
Yes, if the company successfully adapts to Market changes and improves its business strategies, its stock could become more valuable over time.
