MicroStrategy (MSTR) outperforms the S&P500 with Bitcoin

Since 2020, the business intelligence company MicroStrategy has recorded better performance than any company listed in the S&P500 index, mainly thanks to its exposure to Bitcoin.

In the last 4 years, the MSTR stock has grown much more compared to the major US stocks, even outperforming the same orange cryptocurrency.

MicroStrategy could also be added to the S&P500 next year, if it meets certain specific selection criteria.

In the meantime, Saylor continues to raise capital in the American market to purchase more Bitcoin.

Let’s see all the details below.

MicroStrategy grows more than any single company in the S&P500 since adopting Bitcoin

According to FactSet data, MicroStrategy has significantly outperformed the S&P500 index since it decided to focus its core business around Bitcoin.

From August 10, 2020, in fact, while the MSTR stock has grown monstrously by 1,071%, the S&P500 has increased by “only” 70%.

In the same period, MicroStrategy also outperformed the “magnificent 7”, achieving higher returns compared to Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla.

Furthermore, the tech company based in Tyson Corner, Virginia, has even outperformed its own benchmark Bitcoin, with the crypto being up 425% since 2020.

It is not over yet: after the rise of the last few days, MicroStrategy has been elected as the most graphically performing listed company in the entire S&P500.

This means that none of the 500 companies within it have been able to replicate the same results of MSTR, highlighting the success of the bitcoin era.

At the moment MicroStrategy holds a bounty of 252,220 BTC, purchased at an average price of 39,456 dollars for a total cost of 9.9 billion dollars.

The current value of such funds amounts to 16.1 billion dollars, for an unrealized gain of 61.92% at 6.1 billion dollars.

MSTR records a price per share of 144.78 dollars, with a market capitalization of 29.34 billion dollars.

Despite the excellent results, the company has reported earnings worse than expectations in the last 3 quarterly financial reports.

Could MicroStrategy enter the S&P500 index?

With these numbers, MicroStrategy should merit inclusion in the S&P500, considering the graphical returns obtained thanks to Bitcoin.

Consider that in terms of market capitalization, MicroStrategy ranks 306th according to the ranking of the largest publicly traded U.S. companies.

Based on this perspective, the MSTR stock should have a seat of merit within the index, being almost in the top300.

The problem is that the S&P500 is not updated daily based solely and exclusively on the marketcap.

There are also specific criteria to be admitted to this prestigious basket of stocks, which MicroStrategy does not fully meet.

Every company that wants to apply must have at least a capitalization of 11.2 billion dollars with at least 50% of the stocks in free circulation.

The ratio between the annual turnover and the market capitalization must be at least 0.3. Additionally, the monthly traded value must be higher than 250,000 shares for each of the six months preceding the evaluation date.

There are then some limitations for companies like MicroStrategy that bring digital assets to the balance sheet and issue convertible bonds.

In any case, all these problems could disappear starting from next year.

From January 1st, the new FASB rules on companies holding digital assets will come into effect.

From next year, therefore, MicroStrategy and MSTR, despite being focused on Bitcoin, have the possibility of being added to the S&P500. It is crucial that on October 29 the company reports positive earnings, otherwise it will be excluded from the index.

This would mean a strong impact on society, which would increase the balance of undistributed profits by about 3 billion dollars.

MSTR would mark a strong increase in demand, as all entities that will expose themselves on the S&P500 will indirectly buy the Microstrategy stock.

MicroStrategy increases the offering of 2028 convertible bonds: the proceeds are used to buy Bitcoin

A few days ago, MicroStrategy increased its offering of senior convertible bonds maturing in 2028, raising the capital available to purchase Bitcoin

The offer includes an option exercised by the buyers for another 135 billion dollars, raising the net revenues to 997.4 million dollars.

In total, the software company has raised 1.01 billion dollars, bringing the total debt to 3.9 billion dollars.

The same plan involves using part of its proceeds to repay all 500 million of the bonds at 6.125% maturing in 2028.

With the conversion and repayment of various MicroStrategy bonds, it will reduce part of the annual interest expenses, going from 58.9 to 34.6 million dollars.

As mentioned, Michael Saylor has used a good portion of the capital raised to increase his exposure to Bitcoin.

Between September 13 and 19, the American company added 7,420 BTC to its reserves, spending 458.2 million dollars.

It is certainly not the first time that MicroStrategy adopts a strategia similar.

Since August 2020, ever since choosing to invest heavily in Bitcoin, it has started to gather liquidity privately. The money was then converted into Bitcoin through a recurring purchase program, with the crypto that has never been sold to date.

This has allowed it to outperform the S&P500, with the price action of its own MSTR stock starting to resemble more and more that of the Bitcoin benchmark.

MSTR stock: analysis and forecasts of the price

MSTR di MicroStrategy è cresciuto del 111% da inizio anno, battendo sia S&P500 che Bitcoin, anche su time frame più ridotti.

The stock currently marks a price of 144.78 dollars, down about 22% from the local top in March, when it had reached the peak of 190 dollars.

The stock had a golden moment on the market from October 2023 onwards, coinciding with the general rise of crypto in Q4 2023.

In that juncture MSTR saw its quotations double from the initial value of 30 dollars, reaching 60 dollars by the end of the year.

In Q1 2024 the demand started to increase dramatically, further tripling the value of Microstrategy’s stock.

From March to today, the stock moves within a macro-range chart that goes from 180 to 105 dollars, with an amplitude of 75% upwards and 40% downwards.

Now the prices are in perfect balance within the range.

If Bitcoin were to skyrocket in the last months of the year, surpassing its own ATH, it is likely that MicroStrategy will also record interesting performances.

We expect a pump above 200 dollars if MSTR emerges victorious from the current range, surpassing the 180-dollar barrier.

From there on, there will be a phase of price discovery, where only the market can determine the fair value of the company. If from next year it will then be included in the S&P500, it will be tough for the competitors in the software intelligence and digital resources sector.

Indicatively, the market capitalization of the stock could easily rise to 50 billion dollars, elevating the price of MSTR to 250 dollars.

Fasten your seat belts, trader.