Is MicroStrategy undervalued?

Founded in 1989, MicroStrategy is a U.S. company that provides business intelligence, mobile software, and cloud-based services. Led by Michael Saylor, one of its three co-founders, the company saw its first major success in 1992 after landing a $10 million contract with Mcdonald’s.

Throughout the 1990s, MicroStrategy saw its revenue grow by over 100% yearly as it positioned itself as a leader in data analytics software. The onset of the dot.com boom in the late 1990s supercharged the company’s growth and culminated in 1998 when it went public.

And while the company has been a staple of the global business environment for decades, it wasn’t until it acquired its first Bitcoins in August 2020 that it came under the radar of the crypto industry.

Saylor made news by making MicroStrategy one of a handful of public companies to hold BTC as part of its treasury reserve policy. At the time, MicroStrategy said that its $250 million investment in BTC would provide a reasonable hedge against inflation and enable it to earn a high return in the future.

Since August 2020, the company has periodically been purchasing large quantities of Bitcoin, affecting both the price of its stock and BTC.

At the time of MicroStrategy’s first Bitcoin purchase, BTC was trading at around $11,700, while MSTR was trading at approximately $144. At press time, Bitcoin’s price hovers around $22,300 while MSTR closed the previous trading day at $252.5.

This represents a 75.6% decrease from MSTR’s July 2021 high of $1,304. Combined with Bitcoin’s price volatility, the sharp drop in the company’s stock price in the past two years pushed many to criticize MicroStrategy’s treasury management strategy and even actively short it.

In this report, CryptoSlate dives deep into MicroStrategy and its holdings to determine whether its ambitious bet on Bitcoin makes its stock currently undervalued.