MicroStrategy Not Overvalued? Charles Edwards Explains Why

MicroStrategy, the largest publicly traded corporate holder of Bitcoin, has seen its stock rise by an astonishing 94% year-to-date (YTD), fueled by Bitcoin’s climb past $97,000. With 331,200 Bitcoin on its balance sheet, valued at approximately $32 billion, the company currently holds $15.51 billion in unrealized gains.

MicroStrategy’s YTD stock performance has surpassed several major tech companies, beating Apple by 21%, Amazon by 24%, and Tesla by 6%. This reflects the growing integration of cryptocurrencies into mainstream finance and increasing demand for Bitcoin-backed equities.

However, the company’s heavy reliance on Bitcoin leaves it vulnerable to market swings. A sharp drop in Bitcoin’s value could significantly impact MicroStrategy’s valuation and stock price.

Is Microstrategy Overvalued?

While many in the market are of the opinion that MicroStrategy is overvalued, Charles Edwards, the founder of Capriole Investments has a different opinion. 

In a latest X post, he explained how it is not overvalued. He noted that at a $106B market cap and a 70% premium to MSTR’s Bitcoin NAV, it could not be undervalued. He claimed that if the current bull run keeps going strong, if this Bitcoin cycle is anything like the last (and even if its worse), and if Saylor keeps buying, then MSTR has a lot of ‘runway’. 

Aggressive Bitcoin Buying – The Perfect Strategy?

However, he noted the key requirement for it to happen is that Saylor needs to buy Bitcoin more aggressively the wider their NAV premium is. The firm recently announced its $42 billion acquisition plan, also known as the 21/21 plan. However, Charles notes that the plan will not work anymore as the market has already priced it in. Therefore, he noted that we should be looking for upwards of $50 billion over the next year. 

While that may seem like a lot, Charles pointed out that Saylor has already raised $9.6B in the last 9 days alone. Bitcoin will soon be over $2 trillion, and there’s a massive audience of bond traders that can’t access Bitcoin due to their investment mandate, Charles remarked. 

Saylor Needs To Raise More Capital

Notably, the US bond market is $50T, which is more than 25 times the size of Bitcoin. He highlighted that currently, MSTR is one of the only vehicles that gives bond traders exposure to Bitcoin. With MSTR issues being constantly oversubscribed, there is a massive of demand here for the best-performing bonds in the world.

“So yes, as this Bitcoin bull cycle unfolds, it’s easy to imagine a measily $50B being allocated to capture some of that upside via MSTR. Not to mention the capital-raising potential from equity issues as well,”

To fully realize its potential, Edwards stressed that Saylor must continue raising capital aggressively over the next year to close the NAV premium. If successful, MicroStrategy’s stock could see significant gains. Regardless, Edwards believes the market is poised to witness one of the largest Bitcoin buyers in history ramp up its activity.

The next chapter in MicroStrategy’s Bitcoin journey could well determine the new benchmarks for corporate cryptocurrency strategy.