Bernstein Report: Micro-Strategy is Creating the Bitcoin Capital Market! Stocks looking at $2,890

According to Coindesk citing a research report by Wall Street investment bank Bernstein, MicroStrategy, a software company that has been buying Bitcoin aggressively since 2020, has become a The only company to develop a convertible bond tied to Bitcoin is leading the Bitcoin capital market forward.

MicroStrategy is pioneering the Bitcoin capital market

Bernstein analysts Gautam Chhugani and Mahika Sapra first praised MicroStrategy, believing that the company is pioneering and leading the global Bitcoin market Capital Markets: Michael Saylor’s company is the only one to have developed a Bitcoin-related convertible bond to meet institutional demand.

It is reported that the company has raised more than US$4 billion through the issuance of convertible bonds. Two analysts expect it will be used to buy Bitcoin and will continue to raise funds to add to reserves.

Currently, MicroStrategy holds a total of approximately 214,000 Bitcoins, worth approximately US$14.5 billion, accounting for 1% of the total Bitcoin circulation.

Bernstein: MicroStrategy’s stock price target is $2,890

Regarding MicroStrategy’s convertible bond strategy, Bernstein pointed out that when Bitcoin rises, the company will have more room to issue New bonds; conversely, when cryptocurrencies decline, the company can also issue new shares to reduce leverage.

Two analysts emphasized that MicroStrategy’s flexible use of equity and debt financing methods has enabled the company’s Bitcoin holding income per share to increase by nearly 67% in the past four years: MicroStrategy’s long-term The convertible debt strategy means that on the one hand, the company has enough time to benefit from the potential price increase of Bitcoin; on the other hand, the liquidation risk of the cryptocurrency on its balance sheet can also be controlled.

Finally, Bernstein gave MicroStrategy stock an outperform rating with a price target of $2,890, and the current price is about $1,469.

Does the Bitcoin strategy still work?

However, MicroStrategy’s Bitcoin strategy is not without its shortcomings. Converting convertible bonds into stocks and issuing new shares will dilute shareholders’ equity, reduce earnings per share (EPS), and affect investors’ stock prices. Anticipate and cause a decline.

Perhaps because the company’s “Bitcoin strategy” has long been seen through, it is also one of the main short selling lists of many institutions. There are currently 24 micro-strategy short positions in the market, among which the largest net short position The position is approximately $2.4 billion.

In March this year, investment institution Kerrisdale Capital also mentioned in a research report that micro-strategies have seen a substantial premium compared to Bitcoin: after the launch of the Bitcoin spot ETF, buy micro-strategies to gain exposure to Bitcoin. The approach will be gone forever, and the era of the company’s so-called “Bitcoin strategy” will finally come to an end.

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