Summary MicroStrategy is a premier Bitcoin play on NASDAQ, positioned for explosive growth during the upcoming Q4 2024 crypto bull run. MSTR has outperformed nearly every S&P 500 stock since adopting a corporate Bitcoin strategy in August 2020, generating almost $5 billion in profit. The company holds 226,500 bitcoins, making it a highly leveraged Bitcoin play, with significant risk factors including Bitcoin price volatility, crypto hackers, and Michael Saylor's influence. My game plan is to load up on MSTR shares in September, anticipating 2 to 3x returns by January 2025, with a conservative price target of $250 per share. MicroStrategy ( MSTR ) is the premier Bitcoin play on the NASDAQ that is positioned for explosive growth during the upcoming Q4 crypto bull run. Too many investors are sleeping on the fact that MSTR has outperformed nearly every single S&P 500 stock since Michael Saylor adopted a corporate Bitcoin strategy in August 2020. MSTR Performance vs Other Assets (microstrategy.com) Think about this for a second: Saylor returned more value to shareholders by borrowing capital and purchasing 1 single asset: Bitcoin. MicroStrategy has made almost $5 billion in profit since buying Bitcoin in 2020. It's only a matter of time until more CEOs catch on and understand that Bitcoin can help any company outperform its peers over the long run. MicroStrategy has performed so well over the last 4 years that the company performed a 10 to 1 stock split thanks to all of the bullish demand. MicroStrategy Overview MicroStrategy is a business software and Bitcoin development company founded in 1989 by Michael Saylor and Sanju Bansal. It's funny because MicroStrategy is headquartered in Vienna, VA, just outside of Washington, DC where I grew up. My father talked about Michael Saylor during the Dot com boom and said he was once the richest man in Washington, DC at one point! Of course, all this took place before MicroStrategy adopted a corporate Bitcoin strategy in August 2020. The company generates revenue through product licenses, subscriptions, support, and other services. However, most MSTR investors are interested in the company's Bitcoin accumulation strategy. MicroStrategy accumulates Bitcoin in 3 ways: Investing free cash flows in Bitcoin Borrowing money to buy Bitcoin Raising money through ATM offers to buy Bitcoin MicroStrategy borrowed $3.8 billion in senior secured and convertible debt to acquire more Bitcoin. In June 2024, the company issued an $800 million 2032 convertible note at an adjusted conversion price of $2,043 per share. Also, MicroStrategy raised $2 billion using an ATM market offering to buy more Bitcoin. On September 13th, 2024 , MicroStrategy tapped its ATM offering and purchased an additional 18,300 BTC for $1.1 billion at ~$60,408 per Bitcoin. The company now holds a whopping 244,800 Bitcoin and could add even more BTC since MicroStrategy still has $900 million left in its ATM offering. MicroStrategy invented the term "BTC Yield" to show the % change period to period of the ratio between Bitcoin holdings and assumed diluted shares. Right now, the BTC yield is 12.2%, but the company plans to bring this down to 4 to 8% over the next 3 years. Saylor and co are some of the biggest Bitcoin bulls on the planet, and the company alone owns more than 1% of Bitcoin's total supply. With so much BTC on hand, I consider MSTR the best leveraged Bitcoin play on the market right now. It's been humbling to witness how consistent MicroStrategy has been with their Bitcoin purchases. MSTR Bitcoin Accumulation Over Time (microstrategy.com) MSTR Q2 2024 Results In Q2 2024, MicroStrategy earned $111.4 million in revenue (down 7.4% YOY). Net losses were $200 million in Q2 2023, but most of that was due to digital impairment losses. Bitcoin was down 12.9% in Q2 2024, so the company lost $180.1 million because of this. The good news is that digital impairment losses are unrealized losses since MicroStrategy believes in a "Never Sell" Bitcoin adoption strategy. MicroStrategy purchased 12,222 Bitcoin in Q2 2024 for $805.2 million or $65,882 per coin. As of July 2024, the company holds 226,500 bitcoins at a total cost of $8.3 billion or $36,821 per coin. Q2 2024 MSTR Bitcoin Highlights (microstrategy.com) To break things down on a daily basis, MicroStrategy accumulated 135 Bitcoin on average per day in Q2 2024. That's literally 30% of the daily issued being acquired by 1 company. Are you starting to understand why so many investors are bullish on MSTR? If Bitcoin becomes the global treasury reserve asset and hits Hal Finney's $10 million BTC price prediction , then MSTR shareholders will be very happy! Understanding Crypto Bull Markets The reason I'm so bullish on MicroStrategy right now is because of the upcoming Q4 2024 crypto bull run cycle. My prediction is based on the historical 4-year Bitcoin cycle that usually starts with the Bitcoin halving event. The Bitcoin halving event is when the daily issuance of Bitcoin gets cut in half every 4 years. Satoshi Nakamoto (the anonymous founder of Bitcoin) wanted to build scarcity and value into the Bitcoin network by reducing the daily release of BTC on a predictable schedule. This is the exact opposite of the legacy financial system that prints too much money, causing inflation. Scarcity increases value, whether you are talking about Gold or rare baseball cards. Saylor understands this well, which is why MicroStrategy's massive 244,800 Bitcoin stash should garner more attention before the next crypto bull run takes into effect. Risk Factors Lower Bitcoin prices : MicroStrategy is extremely linked to Bitcoin prices because the company holds so much BTC on its balance sheet. Typically, MSTR shares will go up quicker than Bitcoin on green days and crash harder than Bitcoin on red days. That's because MSTR is a leveraged Bitcoin play to most retail and institutional investors. I don't expect Bitcoin to crash in price, but an unexpected Bitcoin crash could really tank MSTR share prices. Crypto Hackers : MicroStrategy uses Coinbase as their Bitcoin custody partner, but I always wonder what would happen if Coinbase got hacked and MicroStrategy lost their Bitcoin. This would crush the company's market cap at a record pace. The good news is that Coinbase keeps most of its Bitcoin in cold storage, but the whole FTX situation puts everyone on edge. Coinbase is publicly traded on the NASDAQ, which helps with credibility and trust. However, I always fear that Coinbase could ruin MicroStrategy's BTC stash if something were to happen inside the company. Death of Michael Saylor : Saylor has millions of followers across social media who own MSTR stock because of him. I don't want to think about it, but an untimely death of Michael Saylor would really tank MSTR stock prices. A lot of retail investors own MSTR because of him even though they don't understand how the company works. Delayed Interest Rate Cuts : Fed Chairman Jerome Powell needs to cut interest rates soon before the U.S. economy starts tanking. So many people are broke or struggling to pay bills, which means the Fed must step in and cut rates to boost economic activity. Interest rate cuts are generally bullish for stocks and crypto because high-yield investors look for returns elsewhere once the risk-free 5% yield on cash dries up. However, if Jerome Powell doesn't cut rates, then MSTR shares cannot go as high without attracting fresh capital from the sidelines. My Game Plan for MSTR I plan to load up on MSTR shares during September while prices remain depressed. September is historically the worst month for Bitcoin while October, November, December, and January have been extremely bullish months for Bitcoin over its 15-year history. Bitcoin Average Monthly Returns 2010 to 2024 (bitwiseinvestments.com) Holding MSTR shares can provide 2x to 5x returns over the next 3 to 6 months if history repeats itself. During the previous 2020 halving cycle, MSTR shares soared from $15 in September 2020 to $75 in February 2021. Data by YCharts Last cycle provided a solid 5x gain over the same 6-month period, but I'm being a bit conservative this time around. Here's a quick PT breakdown, assuming MSTR shares like the last bull run: 2x: $260 3x: $390 4x: $520 5x: $650 With a $14 billion Bitcoin stash, MicroStrategy shares will positively correlate to Bitcoin price movements. Saylor built a wide Bitcoin moat around the company that takes the focus off of day to day operations and puts it on the company's iron clad Bitcoin treasury holdings. It's possible that management does a share offering if the price of MSTR shares soars quickly. They could use that money to buy more Bitcoin during the bull market since Saylor quoted "he would be buying the top forever". Of course, you can buy some call options to maximize your gains. My guess is MSTR has a very strong Q4 with 3 bullish months in a row followed by a selloff in January as early MSTR investors take profits. That makes the following call option strikes dates extremely attractive to mid-term MSTR investors: October 25 $150c: These calls have a good chance of finishing ITM during the "Uptober" pump. Bitcoin is up around 28% historically in October, so it MSTR could close October at $167 or higher (most likely higher since MSTR moves higher during bullish Bitcoin moves). November 15 $180c: November is also historically bullish for Bitcoin with an average annual gain of 37%. If Bitcoin continues to run higher, MSTR should finish over $228 by December 1st, 2024. January 17 $200x: December and January are both historically bullish for Bitcoin, so I expect MSTR to pump well over $250. These Jan 17 calls have the potential to make bank if held long enough. I choose these options because they have the best chance of making money over the next 6 months. You can either sell the options for profit or exercise them into shares if you have enough capital. All of these call options should print before the expiration date, so load up those MSTR call options if you are bullish on Bitcoin over the next 6 months. MSTR is a better play than Bitcoin miners such as CleanSpark ( CLSK ), MARA ( MARA ), or Riot Blockchain ( RIOT ) because the company has a stronger accumulation strategy and doesn't dilute shareholders as aggressively. I also prefer MSTR over Bitcoin ETFs because you don't pay any expense ratio fees. Even just a small 0.25% can add up over 10 to 20 years if you have a long-term investment horizon. Final Thoughts What's in store for MSTR? I have no clue, but it's my current largest stock holding right now. Beware of the upcoming crypto bear market in 2026, but things should be smooth sailing over the next 3 to 6 months if history repeats. I may take some profits on my call options in January 2025 and let my shares ride.
