MicroStrategy Inc.’s (MSTR), despite the continued decline in Bitcoin prices, has seen their net asset value premium (NAV) surge to its most recent high since February 2021.
Recent data shows that the NAV premium has increased to 2,5 times. This premium reflects MicroStrategy’s market value relative to Bitcoin.
MicroStrategy has a market cap of approximately $37.14 Billion, and its Bitcoins, which total 252,220 BTC, are valued at $15 billion.
The premium has remained the same even though Bitcoin (BTC), which is the currency used to measure Bitcoin, has fallen by 16 percent in value over the past year.
MicroStrategy Stock outperforms Bitcoin by 2024
MicroStrategy stock is soaring in 2024, while Bitcoin struggles. MicroStrategy’s shares are up more than 240% since the January launch of Bitcoin ETFs. They reached an all-time record on October 8th.
Bitcoin, on the other hand, has fallen 16% from its March peak, demonstrating a distinct divergence between performance of both assets.
MicroStrategy’s shares trade at 0.0030 Bitcoins, which is the highest price since 2020, when the company started holding Bitcoins on its balance sheets. The stock is attracting investors who see it as an opportunity to earn returns greater than Bitcoin.
CoinDesk
MicroStrategy’s aggressive Bitcoin purchase strategy
MicroStrategy’s aggressive acquisition strategy, which includes both debt financing and equity funding, is responsible for the rise of its premium.
The company increased its Bitcoin holdings consistently since August 2020 when it adopted Bitcoin as an important balance sheet asset. It has raised capital by using ATM equity offerings, convertible senior notes, and at-the market (ATM), or other forms of raising capital.
CoinDesk
MicroStrategy has been able to increase its Bitcoin per share holdings by a significant amount thanks to this strategy. Each share is currently worth approximately 0.0012 Bitcoin.
The company, despite the potential for shareholder dilution has grown its Bitcoin stock faster than the rate of dilution. This maintains a positive position for the shareholders.
CoinDesk
MicroStrategy’s Bitcoin yield is continuing to increase
MicroStrategy’s “Bitcoin yield” is a key metric. It measures quarter-overquarter changes in the percentage ratio between Bitcoin holdings and outstanding diluted shares.
This metric increased to 5.1% in 2024 from the 4.4% recorded the quarter before, showing the ability of the company to grow its Bitcoin investments despite the market’s volatility.
So long as MicroStrategy continues to maintain this aggressive acquisition strategy, the stock premium it has relative to Bitcoin could grow. Investors might view the stock as an easy way to get exposure to Bitcoin price fluctuations.
Future of MicroStrategy’s Bitcoin Premium
MicroStrategy’s NAV premium will likely remain high for the near future, given its history of using Bitcoin to increase shareholder value.
The ratio of the market capitalization and the Bitcoins held by the company could increase if Bitcoin prices rise or if demand for its stock is strong.
But risks remain. The risks are still there.
Investors who want to indirectly access Bitcoin but not directly hold it will find the unique way the company balances Bitcoin acquisition and shareholder returns an appealing option.
As updates occur, this post MicroStrategy’s NAV Premium hits Highest Level Since 2021 while BTC Falls 16% could be updated.
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