MicroStrategy Inc. a rising star in the $Bitcoin market?
#197 An analysis on MicroStrategy (Nasdaq: MSTR) and its correlation with Bitcoin
Introduction
Often, a premium subscriber requests an analysis of a security of their interest. Although I cannot cover all securities, when time permits and data is available, I will do a comprehensive analysis. This time, the request was for an analysis of MicroStrategy Inc. (Nasdaq: MSTR).
MicroStrategy was founded in 1989 and has been a publicly listed Nasdaq company since June 11, 1998. It prides itself on being the world's first Bitcoin development company.
Its steadfast commitment lies in advancing the Bitcoin network through active participation in financial markets, advocacy, and technological innovation. MicroStrategy strategically employs its cash flows, equity, and debt financing to amass Bitcoin as its primary treasury reserve asset.
Furthermore, the company specializes in developing AI-powered enterprise analytics software that effectively harnesses its capabilities to generate Bitcoin applications.
MicroStrategy is confident that its operational framework, Bitcoin strategy, and emphasis on technological innovation present a distinctive avenue for value creation.
MicroStrategy (MSTR) has some similarities with meme stocks, such as volatile price movements, high-risk potential, and retail investor interest. However, it differs from typical meme stocks due to its legitimate business model, leadership, institutional interest, and correlation with Bitcoin's price movements. It's often described as a Bitcoin proxy stock or a leveraged Bitcoin play.
The stock chart of MicroStrategy shows a remarkable correlation with the price of Bitcoin, as you can see in the chart below.
Note: It’s important to understand that analogies or correlations like the ones above may stop working when fundamental factors or planetary cycles change
Starting in August 2020, MicroStrategy has acquired millions of Bitcoin as a treasury reserve asset. The decision to do so was made in response to decreasing returns from cash, a weakening dollar, and other global macroeconomic factors. MicroStrategy is likely one of the biggest public company holders of Bitcoin.
A closer look at MicroStrategy's stock price indicates that investors are considering the price of Bitcoin when determining the company's value. With Bitcoin's recent surge in price, it may seem that MicroStrategy's acquisition of Bitcoin is effectively boosting the value of its investment. However, this might be a rumor. Investors may buy or sell MicroStrategy's stock based on Bitcoin’s price movements and speculation. One must be careful with such conclusions; as Karl Pearson said, “Correlation is not causation."
In this post, I will briefly cover MicroStrategy’s fundamentals and explore the planetary cycles of Jupiter and Mars, as well as time cycles for our premium subscribers in more detail. I will examine the monthly, weekly, and daily charts to provide further insight into the future direction of its stock price.