tl;dr
Citigroup upgrades MicroStrategy (MSTR) to 'Buy' with a $485 target, linking its stock to Bitcoin's volatile trajectory. The report highlights the company's role as a Bitcoin proxy, balancing potential upside with risks from crypto's volatility.
**Citi Upgrades MicroStrategy Stock to "Buy," Targets $485 as Bitcoin's Volatility Looms**
In a recent report, Citigroup (Citi) has upgraded MicroStrategy’s stock—now rebranded as “Strategy”—to a “buy” rating, setting a price target of $485. The bank positioned the company as a key indicator of Bitcoin’s (BTC) potential upside and downside momentum, highlighting its unique role as a corporate entity heavily exposed to the cryptocurrency market.
The investment bank noted that if Bitcoin reaches its 12-month price target of $181,000—a figure it assigned to the asset last week—MicroStrategy’s stock could surge further. The company, which trades under the ticker MSTR on the Nasdaq, closed at $301.91 on Tuesday, up 1.7% from the previous day, according to Yahoo Finance. However, this remains below its all-time high of $473.83, recorded in 2024.
Citi’s analysis emphasized the firm’s net asset value (NAV) premium, suggesting it could range between 25% and 35%, aligning with historical multiples of 2.5x to 3.5x Bitcoin’s yield if the cryptocurrency maintains its upward trajectory. “Our view that MSTR’s NAV premium can range 25%-35%... assuming continued positive momentum for Bitcoin,” the report stated.
Despite the optimistic outlook, Citi issued a cautionary note. The bank warned that MSTR’s stock is a “leveraged proxy” for Bitcoin, with its value nearly entirely tied to the cryptocurrency’s volatile performance. A moderate decline in Bitcoin’s price, the report warned, could lead to “magnified losses” for shareholders.
**A Corporate Bitcoin Pioneer**
Strategy, formerly known as MicroStrategy, began accumulating Bitcoin in August 2020 as a hedge against inflation during the COVID-19 pandemic. The company has since become the largest corporate holder of the asset, amassing 640,418 Bitcoins—valued at approximately $71.6 billion. Its business model allows investors to gain exposure to Bitcoin through its stock, effectively securitizing the cryptocurrency.
CEO and co-founder Michael Saylor has been a vocal advocate for Bitcoin, frequently touting its potential to benefit corporations. While Strategy’s approach has inspired other companies to invest in digital assets like Bitcoin and Ethereum, experts have raised concerns about the risks. Critics argue that such strategies may not be suitable for all businesses, given the inherent volatility of cryptocurrencies.
**Market Volatility and Broader Implications**
As of the latest data, Bitcoin was trading at $111,490, down over 11% from its October all-time high of $126,080. This decline has intensified scrutiny of corporate Bitcoin holdings, with some investors questioning the long-term viability of such bets.
Citi’s upgrade underscores the growing intersection between traditional finance and cryptocurrency, as institutional investors increasingly view Bitcoin as a strategic asset. However, the report’s warnings highlight the precarious balance companies like Strategy must strike between leveraging Bitcoin’s potential and managing its risks.
As the crypto market continues to evolve, Strategy’s performance—and the broader implications of corporate Bitcoin adoption—will remain under close watch by investors, regulators, and industry analysts alike.