Microstrategy (MSTR) Stock Down Another 12% in Pre Market on Bitcoin (BTC) Price Decline and SEC Pushback, Analyst Remains Positive

January 24, 2022 7:16 AM EST
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Price: $319.38 -3.22%

Rating Summary:
    8 Buy, 8 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 42 | New: 10
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MicroStrategy (MSTR) Stock Down Another 12% in Pre Market on Bitcoin (BTC) Price Decline and SEC Pushback, Analyst Remains Positive

Shares of MicroStrategy (NASDAQ: MSTR) are down another 12% in pre-market Monday after closing 17.8% lower on Friday.

MicroStrategy stock price is under severe pressure in recent days as Bitcoin (BTC) price continues its slump. The world’s leading digital asset is trading below $34,000 on Monday, which translates into a pullback of over 50% compared to the all-time high printed last year.

Moreover, MicroStrategy stock price took another hit on Friday when Bloomberg reported that SEC told MSTR that it could no longer remove impairment charges connected to its bitcoin holdings in its presentation of its non-GAAP operating income.

For instance, MSTR reported impairment on its bitcoin holdings of $65.2 million for Q321. The total impairments related to MicroStrategy’s bitcoin acquisition strategy are now $754.7 million.

Still, BTIG analyst Mark Palmer reiterated a Buy rating and a $950.00 per share price target on MSTR. The analyst sees the impact of such charges as “essentially meaningless to MSTR’s inherent value,” which completely reflects the value of its BTC holdings and the company’s core software business.

“While the impairments create an unfavorable optic that business media has tended to emphasize in reports reacting to the company’s quarterly prints, we believe the market has largely dismissed the impairment figures as noise. We are reiterating our Buy rating on MSTR and our price target of $950 based on a sum-of-the-parts analysis in which we combine the value of the company’s holdings of bitcoin and the value of its enterprise analytics software business. Our valuation assumes that the price of bitcoin will increase to $95K by YE22,” Palmer said in a client note.

By Senad Karaahmetovic | [email protected]

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