Investors: Buy MicroStrategy Stock (MSTR) or Bitcoin?

Investors looking to dip their toes into the world of Bitcoin might want to consider a different route: buying MicroStrategy (MSTR) stock. This may seem like an unexpected choice, but the numbers don’t lie – over the last year, while Bitcoin has seen impressive gains of 162%, MicroStrategy has soared a whopping 711%.

What’s going on here that’s driving MicroStrategy’s meteoric rise? Well, it turns out it’s not just about their significant Bitcoin holdings, which make up about 1.3% of the total Bitcoin in circulation. Since 2020, MicroStrategy has been all about leveraging their balance sheet in a unique way by issuing bonds. This strategy, reminiscent of what banks do to make money, amplifies gains during good times for Bitcoin, making MSTR a potentially lucrative but risky choice for those wanting a piece of the cryptocurrency action.

So, how did MicroStrategy go from a software company to a Bitcoin powerhouse? It’s all thanks to their CEO Michael Saylor, a big Bitcoin enthusiast who saw an opportunity and went all in. Through a savvy move of buying Bitcoin with borrowed money, mainly through convertible bonds, MicroStrategy has become the biggest corporate holder of Bitcoin, with over 331,000 coins in their treasury, purchased at an average price of around $49,874 per Bitcoin.

Now, why might someone choose to invest in MicroStrategy instead of just buying Bitcoin? Well, for starters, the numbers speak for themselves. Over the last five years, investors in MicroStrategy saw gains of 2,521%, compared to 1,156% for Bitcoin. That’s a significant difference, indicating that MicroStrategy’s strategic approach has paid off big time.

And just like how traditional banks raise funds at low interest rates to invest in high-return assets, MicroStrategy is using the same playbook, this time focused solely on Bitcoin. By issuing debt at 0% interest rates and betting big on Bitcoin’s rise, MicroStrategy is hoping to continue its winning streak and provide exceptional returns to its shareholders.

But, as with any high-risk strategy, there are pitfalls to be aware of. During tough times, like the recent crypto winter from early 2021 to 2023, MicroStrategy’s stock took a hit, dropping as much as 86% while Bitcoin prices were down as well. It’s a rollercoaster ride that’s not for the faint of heart.

In the end, it’s up to each investor to decide if MicroStrategy is a good buy. According to TipRanks, analysts are bullish on MSTR, with an average price target of $357.38, which is a slight downside from the current price of $397.28. But for those willing to take on the risk, MicroStrategy might just be the way to go for exposure to the Bitcoin market.

In conclusion, MicroStrategy’s unique approach to investing in Bitcoin has paid off handsomely so far. As always, past performance doesn’t guarantee future results, but with the right mix of strategy, timing, and a healthy appetite for risk, MicroStrategy could be a solid choice for those looking to ride the Bitcoin wave in a unique way.