Benchmark still gives MicroStrategy a buy rating, expecting Bitcoin to reach $225,000 by 2026

ChainCatcher news, according to Barrons, Benchmark analyst Mark Palmer has given MicroStrategy a "buy" rating and set a target price of $650 based on an estimate of the company's Bitcoin holdings in 2026. He expects the price of Bitcoin to reach $225,000 by the end of 2026.

The analyst is also willing to assign a price-to-earnings multiple to the theoretical gains created by MicroStrategy's acquisition of Bitcoin through the issuance of stocks or bonds. MicroStrategy mentioned a so-called Bitcoin "yield" (i.e., the ratio of changes in Bitcoin holdings to the number of outstanding shares), which has exceeded 70% this year. However, this "yield" relies on the company selling shares at a premium above the value of its Bitcoin holdings, which is uncertain.

The high premium for MicroStrategy in 2024 is a special phenomenon. In 2022 and 2023, the company's stock price was nearly in line with its Bitcoin holding value, with a premium of about 20% at the end of 2023. If the Bitcoin premium continues to decrease and the price of Bitcoin experiences a significant drop, MicroStrategy's stock price may face further downside risks.