MicroStrategy’s ‘Nav Premium’ Shouldn’t be Feared, Says Benchmark, Raising Price Target to $245

As a seasoned analyst with over two decades of experience in the tech and crypto markets, I find myself intrigued by the latest developments surrounding MicroStrategy (MSTR). The recent price target hike by Benchmark from $215 to $245 is not just another bullish call; it’s a testament to the unique value proposition that this company offers.

In simpler terms, Benchmark, an investment bank, suggested that MicroStrategy’s (MSTR) elevated stock price, which some attribute to its bitcoin holdings, may be overlooking the unique shareholder value offered by the company, as stated in their recent research report.

According to Mark Palmer, the unique capacity of MSTR to create growing returns on its Bitcoin holdings, through what they call “smart borrowing,” sets it apart from other ways to invest in Bitcoin, like traditional Bitcoin ETFs.

As an analyst, I’ve maintained my bullish stance and continue to recommend buying Palmer’s stock. Previously, I had set a price target of $215, but today I’ve upgraded it to a new target of $245. This decision comes in light of the surge in bitcoin’s price to $68,400, which appears to be positively influencing MSTR shares. As a result, we’re seeing a 6.6% increase in MSTR share price today, with it currently trading at $206.19.

Under the leadership of Executive Chairman Michael Saylor, shares for this self-proclaimed Bitcoin Development Company are currently trading at a 2.4 times higher price compared to the value of their bitcoin holdings. Some traders speculate that investing in the company’s equity rather than owning Bitcoin directly (or through spot ETFs) might not be a wise decision.

MicroStrategy’s net asset value (NAV) is determined by dividing the market value of MSTR shares by the worth of its Bitcoin reserves. The NAV ratio for this tech firm has reached a record high of 2.5 times the value of its Bitcoin holdings, with a market capitalization exceeding $41 billion compared to Bitcoin holdings worth approximately $17 billion.

According to Benchmark’s analysis, they find MicroStrategy’s business strategy sound enough to justify the higher value than its net asset value (NAV). They recommend investors to concentrate on MicroStrategy’s Bitcoin Yield, a concept introduced by Saylor and his team this year. The Bitcoin Yield is a tool that assesses the efficiency of bitcoin investments by calculating the percentage change over time of MicroStrategy’s bitcoin holdings relative to its fully diluted share count. As per Benchmark’s data, the Bitcoin Yield was 17.8% through September 19, while it was predicted to be 1.8% and 7.3% in 2022 and 2023 respectively.