Citibank Downgrades MicroStrategy Stock Following Bitcoin Announcement
MicroStrategy shares fell on Tuesday after Citibank downgraded the business intelligence company for its „disproportionate“ focus on Bitcoin.
Citi analyst Tyler Radke gave MSTR shares a „sell“ rating shortly after the company announced that it would raise even more money to buy Bitcoin (BTC). Radke says CEO Michael Saylor’s „disproportionate focus on Bitcoin“ exposes Bitcoin Aussies System investors to significant risk, particularly after the „over-priced“ rally since September.
„MSTR’s Bitcoin investment has yielded $250 million (or $26 per share or +20 percent) since August 20. That may be impressive, but it is dwarfed by the 172 percent return on the stock. At the current share price, our analysis suggests that the market is pricing in much more optimistic valuation scenarios for the core business and Bitcoin“.
MicroStrategy Share from Yahoo Finance
MicroStrategy’s share price has jumped since August, when the company first announced its Bitcoin investment. Many investors view MSTR as an indirect investment in Bitcoin given the company’s vast digital currency reserves.
On Monday, MicroStrategy announced its intention to invest an additional $400 million in Bitcoin. To this end, the Company plans to issue a $400 million senior convertible bond. Cointelegraph reported that the $400 million could buy more than 20,800 BTC in addition to the $400 million.
MicroStrategy is by far the largest institutional owner of Bitcoin. The company currently has 40,824 BTC in its account, which together are worth $769.2 million.
Institutional investors and corporations are moving to Bitcoin to hedge against inflation and dollar instability. Saylor has compared his company’s cash reserves to a „melting ice cube“ as the purchasing power of the US dollar continues to decline. He believes that asset inflation will rise to more than 20 per cent per year.