MicroStrategy (MSTR) is an American technology company that provides data analysis, hyperintelligence, and AI solutions to companies like Pfizer, Guess, Visa, and Hilton Holdings.
Its core product is known as One, which is a unified analytics platform that helps companies make better decisions. It helps them to address key issues like data silos, dashboard backlog, data overload, and data security.
MicroStrategy’s core business has come under intense pressure in the past few years as its revenue growth has stalled. It made over $510 million in revenue in 2021, followed by $500 million and $496 million in the next two years.
However, MicroStrategy is not known for its tech offerings. Instead, it has become a popular company for its strategy of borrowing heavily and buying Bitcoin. Data shows that it has bought over 252,000 Bitcoins valued at over $18 billion, a substantial premium since it has a market cap of over $45 billion.
MicroStrategy’s stock was trading at $227.80 on Wednesday, while its HypeIndex figure rose to 95%.
Positive hype
MicroStrategy’s positive hype has jumped because of its strong performance this year as it jumped by 260%, beating the S&P 500 and Nasdaq 100 indices.
The hype accelerated after Bitcoin jumped to a record high on Wednesday after Donald Trump won the election.
Trump has pledged to be a more crypto-friendly president and he is expected to remove Gary Gensler from the head of the SEC.
Analysts are upbeat about Bitcoin, with most of them signaling that it could jump to over $100k soon.
Hedge funds and other institutional investors are actively buying Bitcoin ETFs, with the cumulative inflows being over $23.5 billion. These inflows could keep rising amid regulatory clarity.
Bitcoin has strong technicals after it formed a golden cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) have formed a bullish crossover pattern.
MicroStrategy is also seeing strong demand from funds that track the company like MSTU and MSTX.
The company is widely seen as a better alternative to many spot Bitcoin ETFs because it does not have an expense ratio.
MicroStrategy has planned to raise $42 billion over time to buy more Bitcoins, a move that may make it a highly valuable company if Bitcoin keeps rising.
Analysts see more upside, with the average target being at $258, higher than the current $227.
Negative hype
There are concerns that MicroStrategy has become a highly overvalued company since its Bitcoins are worth $18 billion, while its valuation stands at over $45 billion.
The company has become highly exposed to Bitcoin, putting it at risk in case of a major reversal.
MicroStrategy has a high short interest of 16%, meaning that investors expect the stock to reverse in the longer term.
There are also concerns about the performance of its core business as its slowdown accelerates. Analysts expect that its annual revenue will drop by 5% to $471 million this year.
MicroStrategy stock analysis
The daily chart shows that the MicroStrategy share price has been in a strong bull run this year. It crossed the important resistance point at $200, its highest level in March this year.
The stock has remained above the 50-day and 100-day moving averages, signaling that bulls are in control. Therefore, the path of the least resistance for the stock is bullish, with the next point to watch being at $300.
If you’d like to receive more trending stocks straight to your inbox, check out our premium plans. Alternatively, if you’d like to hear more about the services offered by HypeIndex, you can check out our FAQ page.
HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.
The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.
Comments