There is a community on X whose members call themselves Irresponsibly Long MSTR. They believe that MicroStrategy has substantial upside, even after its 538% year-to-date rally. Although members have a range of personal forecasts, there are some who believe the company can trade to a 10X valuation of its bitcoin (BTC) holdings.
For context, MicroStrategy is currently trading at 2.5X the value of its 386,700 BTC. If that multiple were to grow to 10X, the company’s market capitalization would rally from today’s $90 billion to $364 billion.
At a 10X multiple, the company would be worth more than Coca-Cola, Wells Fargo, or Adobe. Moreover, if CEO Michael Saylor continued to acquire additional BTC, that market capitalization would have to keep pace.
Although the company also has a legacy software business that was consistently worth single-digit billions for several years before its transition to a BTC acquisition company, most people disregard that value when calculating this figure.
Although MicroStrategy isn’t a fund and doesn’t have a net asset value (NAV) as the Financial Accounting Standards Board controls that term, traders casually refer to MicroStrategy’s bitcoin as its “NAV.”
By extension, they refer to the multiple of MicroStrategy’s market cap to its BTC holdings as its “NAV multiple” or “mNAV.”
Irresponsibly Long MSTR claims Saylor will find “genius ways” to financialize the firm’s BTC holdings.
Read more: Michael Saylor buys 55,500 more BTC, average price nears $57,000
Generally speaking, people who believe in a 10X mNAV believe that Saylor will somehow discover a breakthrough financial innovation to offer products, services, or financial instruments atop BTC.
Michael Saylor’s ‘genius ways’ attract bulls and bears
One member of Irresponsibly Long MSTR claimed that MicroStrategy’s mNAV can rally to 10X mNAV because Saylor will discover “genius ways” to financialize the company’s bitcoin holdings. The company is supposedly “a completely new type of capital company that has never been possible before, the same way BTC was not possible until we had the internet.”
Another investor advised his community to not underestimate bull market manias and disparaged anyone who doubted MicroStrategy’s ability to attain 10X mNAV as “you must be new here.”
Even one analyst at Canaccord Genuity claimed the company could achieve a 10X mNAV.
On the other side of the trade are bears who think MicroStrategy is a bubble about to pop. Andrew Left of Citron Research called the stock overheated while another commenter likened its investors to proverbial lemmings.
One critic even called the company “a cash-burning money loser with negative working capital.”
Altogether, bulls and bears make the market. At least for 2024, it has paid to be irresponsible in analyzing MicroStrategy and to have simply hopped onto the bandwagon for a 538% rally.
Nevertheless, risks grow the higher MicroStrategy’s mNAV and associated share price climbs.
