The MicroStrategy (NASDAQ:MSTR) share price has exploded in 2024. The data analytics business has been making a series of aggressive investments in Bitcoin. And with a rising crypto market, the stock has skyrocketed by almost 450% since January, putting artificial intelligence (AI) companies like Nvidia to shame.
With that in mind, it isn’t surprising to see the company appear on Hargreaves Lansdown’s list of most-bought stocks this month. However, with so much growth under its belt, can the stock price actually climb higher? Here’s what the experts are saying.
A wide range of opinions
Looking at the opinions of the nine institutional analysts following this business, the overall consensus seems to be positive, with either Buy or Outperform ratings issued. However, where opinions start to divulge is in the valuation.
The most optimistic outlook suggests the Microstrategy share price could climb to as high as $600. That’s just shy of a 60% potential gain compared to the current share price. However, on the opposite end of the spectrum, some analysts have placed their 12-month price target to as low as $187.50 – essentially half of where it stands now.
Interestingly, Citron Research, which has been overwhelmingly bullish on Microstrategy for the last four years, has now opened a short position against the stock. Given Citron’s reputation as a largely successful short seller, does this mean the Microstrategy share price has reached its peak?
High risk, high reward
The fate of Microstrategy’s market-cap appears to be almost entirely tied to the performance of Bitcoin. The group’s been using debt to buy the cryptocurrency to generate huge spreads. And the use of leverage is why the stock has vastly outperformed Bitcoin throughout 2024.
Management appears intent to double down on this strategy with a further $42bn earmarked for even more Bitcoin purchases over the next three years. However, the problem is that leverage works both ways. Should the cryptocurrency take a nosedive, the adverse impact on Microstrategy would also be amplified on the way down as it was on the way up.
The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Is it worth the risk?
With the company putting a lot of money behind Bitcoin, management seems to have little control over its fate. After all, its long-term success now seems almost entirely dependent on the value of the cryptocurrency. On the plus side, the incoming Trump administration has promised to be crypto-friendly. But, how much support it actually offers remains unclear.
Combining all these factors likely explains why analyst share price forecasts for Microstrategy seem to be either extremely positive or hopelessly negative. Personally, I’m not interested in adding this coin-flip-like risk exposure to my portfolio. But for more speculative investors comfortable with high levels of volatility, Microstrategy may be worth a closer look.
