MicroStrategy (MSTR) is the largest corporate holder of bitcoin, and continues to pad its coffers. Therefore, the stock’s price often moves with the price of the cryptocurrency. So, with bitcoin off highs, is MicroStrategy stock a buy, sell or hold?
Bitcoin prices soared to nearly $100,000 in late November following Donald Trump’s presidential election win. Following the cryptocurrency’s climb, MicroStrategy stock also bolted to new highs.
The president-elect is seen as cryptocurrency-friendly and vows to hold onto the country’s bitcoins. Currently, the U.S. government owns over 207,000 bitcoins, mostly seized from criminal activities. Trump even spoke at the largest bitcoin conference in July in Nashville, Tenn., claiming that America would be “the crypto capital of the planet and bitcoin superpower of the world.”
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MicroStrategy can’t seem to get enough of the cryptocurrency. It added another 15,400 bitcoins with a $1.5 billion price tag last week. This is part of its $13.5 billion bitcoin purchases since Oct. 31, according to The Wall Street Journal. That puts its holdings at 402,100 bitcoins with a current value over $38 billion.
The company announced its goal of raising $42 billion of capital over the next three years in its third-quarter earnings release on Oct. 30.
Despite the connection to bitcoin, MicroStrategy is primarily a data analytics and security software provider. It uses artificial intelligence in its reporting tools, interactive dashboards and platform. It serves the retail, financial services, government and health care industries.
MicroStrategy Stock Follows Bitcoin Prices
MicroStrategy stock has been volatile since the election. MicroStrategy stock is extended from a long, late-stage irregular base with a 200 buy point.
The stock hit an all-time high Nov. 21, before reversing to close 16.2% lower the same day in heavy volume. The steep turnabout came after Citron Research wrote in a post on X that it shorted the stock as a hedge on shares it owns. The stock is trying to stabilize after the plunge.
MicroStrategy stock holds a best-possible 99 Relative Strength Rating. The stock climbed 58% in November and around 500% so far this year.
On Aug. 7, the stock had a 10-for-1 split.
MicroStrategy Losses Dwindle
The data analytics company reported its third-quarter results on Oct. 30. It posted a loss of $1.56 per share, mainly from fair market adjustments of its digital asset holdings.
But its Q3 revenue also suffered, with a 10% drop vs. the prior year’s quarter. The company’s sales have declined for six out of the last eight quarters.
Analysts expect continued — but narrower — losses over the next four quarters. Sales forecasts range from a 1% drop in the current quarter to modest increases of 1% to 3% the next three quarters.
Its Accumulation/Distribution Rating of A- indicates fairly heavy institutional buying over the last 13 weeks. Mutual funds have added shares for the last seven quarters.
Is MicroStrategy Stock A Buy, Sell Or Hold?
The bottom line: MicroStrategy stock is not in a buy zone, so it is currently not a buy. Investors should wait for a new base to form.
But if you own it, as always, have your risk management strategy in place and be ready to sell if the stock goes 7% below your buy point. With the stock’s rapid run-up, it would be prudent to take some profits if you still had some after the late-November drop.
Investors can check out IBD Stock Lists and other IBD content to find dozens of the best stocks in addition to MicroStrategy.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
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