What analysts say the Bitcoin halving is set to do for MicroStrategy stock
The publicly traded hoarder of bitcoin could hold close to 300,000 BTC by the end of 2025, the Benchmark Company’s Mark Palmer predicts
Wirestock Creators/Shutterstock modified by Blockworks
One analyst nearly doubled his price target for MicroStrategy stock on Monday as industry watchers anticipate upward price action in the months after the imminent Bitcoin halving.
Mark Palmer, a senior equity research analyst for The Benchmark Company, said in a Monday research note that he had raised his price target for MicroStrategy (MSTR) to $1,875 per share.
The new mark is nearly double that of his $990 price target set for MSTR on Feb. 27. Bitcoin (BTC) climbed to an all-time high above $69,000 about a week later, and would reach new heights after that.
MicroStrategy’s stock price stood at $1,538 at 12:30 pm ET Monday — up 125% year to date and 8% higher than a month ago.
The $1,875 price target assumes bitcoin’s price rising to $150,000 by the end of 2025, Palmer wrote in the note. It stands above a $1,450 MicroStrategy price target made by TD Cowen analysts on March 20, a target that has not been revised since.
Read more: Cheatsheet: MicroStrategy has now outperformed Nvidia this year
The Bitcoin halving — when per-block rewards to bitcoin miners will drop from 6.25 BTC to 3.125 BTC — is scheduled to occur in less than two weeks. While the upcoming Bitcoin halving, like previous ones, is set to create a “supply shock,” the impact of this halving could be magnified given the demand for spot bitcoin ETFs, Palmer added.
The 11 US spot bitcoin ETFs held roughly 827,000 BTC as of April 3, according to BitMEX Research data. The fund category has notched net inflows of more than $12 billion since such offerings launched on Jan. 11.
“We expect the inflows into spot bitcoin ETFs to grow dramatically once institutions begin to invest in them in earnest,” Palmer wrote.
Industry watchers have pointed to the historical upward trend of BTC after Bitcoin halvings.
Read more: BTC price dips after all-time high. Where is it headed next?
Analysts at crypto exchange Bitfinex said in a Monday report that they — similar to Palmer — expect bitcoin to see a 160% post-halving price surge to above $150,000 in the next 14 months.
The Bitfinex analysts noted, however, that bitcoin achieving an all-time high ahead of this halving is an anomaly that “introduces a level of uncertainty into the market dynamics.”
“If the price of bitcoin rises after the halving, we would expect MicroStrategy to remain correlated with that price action,” said Dan Weiskopf, co-portfolio manager of the Amplify Transformational Data Sharing ETF (BLOK).
A growing bitcoin stack
MicroStrategy has increased its bitcoin holdings for 15 consecutive quarters, Palmer noted. He expects the company to continue collecting BTC using proceeds from capital markets transactions and excess cash generated by its enterprise software business.
The company held 214,246 BTC as of March 19. It most recently bought more than 9,000 BTC last month after proposing an offering of $500 million in convertible senior notes due in 2031.
Read more: Who’s the better bitcoin salesman: Larry Fink or Michael Saylor?
Palmer said he estimates that MicroStrategy will hold 298,246 bitcoin by the end of 2025. This would represent a nearly 40% increase from its current bitcoin stack.
Lance Vitanza, managing director of equity research at TD Cowen, told Blockworks last year that he expects MicroStrategy to continue buying BTC when market conditions are attractive — based on BTC price and the price at which MicroStrategy can issue debt or equity securities.
Vitanza said in a March 20 research note that, given a $1.25 billion valuation of MicroStrategy’s operating software business, the market was imputing a 90% premium to the value of the company’s bitcoin holdings.
“Ultimately, we expect that any future contraction in the company’s bitcoin premium will over time be more than offset by a corresponding increase in the underlying price of bitcoin, as the seasoning of new ETPs continues to drive incremental bitcoin demand at the same time incremental supply of bitcoin falls by 50% due the halving of the bitcoin block reward expected this coming April,” Vitanza wrote at the time.
The premium valuation that the stock trades at presents an advantage for the company to continue to buy bitcoin on accretive basis, Weiskopf told Blockworks.
“After the quarter is reported, we would expect further convertible bond issuance since borrowing at less than 1% and selling stock through a convertible [note] with an additional premium over enterprise value is even more accretive than simply selling stock through an [at-the-market offering],” he added.
The stock trading at a premium to its net asset value is supported by several factors, Palmer argued.
“The most impactful of these is MSTR’s demonstrated ability to tap the capital markets at very attractive interest rates — the two convertible debt offerings the company executed during March had coupons of 0.625% and 0.875% — and then use the proceeds to purchase more bitcoin,” he said.
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