MicroStrategy (NASDAQ:MSTR) is a growth stock with an unusual history. It started life as a software company but in late 2020, it began buying cryptocurrency as a means of shoring up its balance sheet. It now claims to be the “largest corporate holder of Bitcoin in the world”.
And it appears to have caught the attention of many investors on both sides of the Atlantic.
Of the 11 US analysts covering the company, 10 consider it a Buy.
Closer to home, during the week ended 3 January, it was the most popular stock with Hargreaves Lansdown’s clients. Of all that week’s purchases on the platform, MicroStrategy saw the most activity, both in terms of trades (3.21%) and the value of deals placed (5.04%).
An extended bull run
Not surprisingly, this interest has helped drive its price higher.
Since January 2024, it’s increased by 470%.
And this impressive performance shows no signs of slowing down. Helped by the prospect of a second Trump presidency (he’s seen as being more pro-crypto than Joe Biden) during the first eight days of 2025, the stock’s up 18%. Past performance is not an indicator of future performance though, of course.
But a closer look at the statistics is revealing.
Although it was the post-Christmas number one with Hargreaves Lansdown’s buyers, it was also popular with sellers, accounting for 4.55% of all trades.
This could be a sign that the stock’s being bought with a view to making a quick profit, rather than for its long-term growth prospects.
It might also explain why it’s the most volatile stock on the S&P 500. Although its done well in 2025, I think it’s worth noting that it’s fallen 28% from its November 2024 peak.
Looking to the future
But the company does have a growth strategy, albeit a simple one. It plans to buy more Bitcoin, and lots of it.
Over the next three years, it hopes to purchase $42bn of the digital asset.
However, given that MicroStrategy’s software business isn’t cash generative — during the nine months ended 30 September 2024, it reported a post-tax loss of $48m — all of the funds will have to come from a combination of debt ($21bn) and equity ($21bn).
And as long as Bitcoin doesn’t crash, I’m sure everything will be okay. Otherwise, I fear it’ll be catastrophic for the company and its shareholders.
The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Leverage
Latest reports suggest that the company currently owns 447,470 Bitcoin, worth approximately $43bn. Its market cap is $84bn — 95% higher.
In other words, investors are happy to pay more for the Bitcoin held by MicroStrategy than if they bought it directly themselves.
To my surprise, this means its share price has outperformed the value of the cryptocurrency over the past 12 months by a factor of four.
This doesn’t appear sustainable to me.
And it suggests that if the value of Bitcoin falls, the stock market valuation of MicroStrategy will crash by a lot more.
Personally, I don’t want to add this level of risk (or volatility) to my share portfolio. I’m therefore going to steer clear of MicroStrategy, despite the hype surrounding the stock.
This post was originally published on Motley Fool
