Why MicroStrategy Shares Soared Last Month

Actions of MicroStrategy (NASDAQ: MSTR) gained 27.3% in September, according to S&P Global Market Intelligence data. The business intelligence software company, known for reinvesting its cash reserves in Bitcoinoverall, it trended upward along with the leading cryptocurrency. It also accelerated in mid-September, when the company said it would borrow another $700 million to refinance old debt and buy even more Bitcoin. And that’s not all — MicroStrategy shares rose again when the new debt was extended to $1.01 billion a few days later.

MicroStrategy’s continued Bitcoin buying spree has boosted the stock

Bitcoin prices rose 10.6% in September, boosted by a growing US economy. Crypto investors are also expecting the digital currency to take off fairly soon following the halving of Bitcoin mining rewards in April. The end of 2024 or the first half of 2025 would be a reasonable starting point for the fourth halving-based price increase, based on market data from the first three halvings.

With 252,220 bitcoins under control as of September 19, MicroStrategy’s digital currency holdings are worth about $15.6 billion today. This is the largest corporate Bitcoin position in the world, according to Bitcoin Treasuries. It is no surprise to see that this company’s stock is following the market trends on the Bitcoin price chart.

The massive Bitcoin position includes 7,420 new coins, bought with the portion of MicroStrategy’s fresh debt that wasn’t used to pay off an older batch of senior notes. Investors liked this increased refinancing and the addition of more Bitcoin, judging by MicroStrategy’s rising stock. Share prices rose 18.7% that week.

Does the MicroStrategy Software Business Still Matter?

MicroStrategy stock has been a fairly accurate proxy for Bitcoin investments from 2020 to early 2024. The software company separated itself from Bitcoin price trends in February of this year as investors embraced the holistic approach to the Bitcoin opportunity. March’s price rally involved another debt-backed Bitcoin purchase, underscoring MicroStrategy’s commitment to its Bitcoin strategy.

I mean, it’s all about digital Benjamins these days. The software business is profitable, and sales of service subscriptions rose 21% year over year in the second quarter. But Bitcoin is the powerhouse that moves the needle for MicroStrategy investors anyway.

For example, MicroStrategy introduced a host of new features to its ONE software suite on October 1, boosting the suite’s generative artificial intelligence (AI) powers and data analytics capability. Market makers yawned and sent MicroStrategy’s stock price 5% lower on the day.

The story continues

So MicroStrategy may be the stock for you if you expect Bitcoin to continue to rise and want to invest in this trend through a standard stock. Or maybe you expect the company to fund massive long-term improvements to its software business from its growing Bitcoin reserves. However, MicroStrategy has become a fairly direct bet on Bitcoin. Cryptocurrency bears should look elsewhere. The market action in September only strengthened this argument again.

Should you invest $1,000 in MicroStrategy right now?

Before buying stock in MicroStrategy, consider the following:

The Motley Fool Stock Advisor the analyst team has just identified what they think they are 10 best stocks for investors to buy now… and MicroStrategy was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $752,838!*

Stock advisor provides investors with an easy-to-follow blueprint for success, including portfolio construction guidance, regular updates from analysts, and two new stock picks every month. The Stock advisor the service has more than four times return of the S&P 500 since 2002*.

See the 10 stocks »

*The stock advisor returns as of September 30, 2024

Anders Bylund has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

Why MicroStrategy Stocks Soared Last Month was originally published by The Motley Fool