MicroStrategy (NASDAQ: $MSTR) is the largest independent public company in analytics and business intelligence. Pursuing dual strategies, MicroStrategy aims to expand its analytics software presence while acquiring and holding Bitcoin for its perceived stability and decentralized architecture, free from government monetary influences.
MicroStrategy introduced a groundbreaking addition to its offerings on March 26, 2024 dubbed MicroStrategy Auto™, the latest addition to MicroStrategy AITM. It promises to transform the way organizations access and utilize business intelligence.
Customizable AI Bot
MicroStrategy Auto™ is an AI-powered bot designed to simplify the delivery of business insights across all levels of an organization. Its lightweight, embeddable design allows seamless deployment as a standalone app within MicroStrategy ONE or integration into third-party applications.
The standout feature of MicroStrategy Auto™ is its extensive customization capabilities, allowing users to tailor its appearance, language style, and level of detail according to their preferences. Additionally, its generative AI allows natural language conversations, removing complex dashboards. This makes business intelligence available to all skill levels.
MicroStrategy Auto™: Transforming Data Productivity
The launch of MicroStrategy Auto™ is expected to significantly enhance productivity and effectiveness for both data consumers and creators. Sales representatives, for example, can now seamlessly access detailed analytics during client negotiations, while data analysts can reduce ad hoc requests and focus on strategic initiatives that drive organizational value.
Nena Pidskalny, the Director of Supply Chain Strategy and Planning at Federated Co-operatives Limited, commended MicroStrategy Auto™’s capabilities, stating, “We think using MicroStrategy AI will unlock huge value by providing a variety of users with deeper insights that previously required more clicks and more granularity to understand; it’s powerful for user self-service.”
MicroStrategy: Powering Auckland University’s BI Excellence
Adding to the excitement surrounding MicroStrategy’s latest offering, the University of Auckland has chosen MicroStrategy as its enterprise Business Intelligence (BI) platform. This strategic move underscores the university’s commitment to data-driven decision-making and positions it as a leader in BI excellence within the education sector.
With a user base exceeding 6,000, the University of Auckland prioritizes user experience and data governance throughout its BI journey with MicroStrategy’s powerful features. The integration with Snowflake’s Data Cloud Platform further enhances data accessibility and security, ensuring a seamless experience that is both secure and user-friendly.
MicroStrategy’s Commitment to Innovation
Saurabh Abhyankar, Chief Product Officer at MicroStrategy, revealed the company is currently developing numerous innovative features for MicroStrategy AI. These advancements are poised to empower all organizations to embrace our transformative vision of Intelligence Everywhere.
Kerrisdale Capital Critiques MicroStrategy’s Bitcoin Strategy
However, MicroStrategy Inc. is being criticized by Kerrisdale Capital, a New York City-based investment firm. On March 28, Kerrisdale released a scathing report questioning the company’s valuation and its strategy of investing in Bitcoin.
In the report, Kerrisdale Capital raised concerns about the rationale behind investing in MicroStrategy when one could directly purchase Bitcoin. The investment firm contends that MicroStrategy’s valuation is inflated primarily because of its heavy dependence on Bitcoin.
This is evident as the cryptocurrency represents a substantial portion of the company’s total worth, overshadowing its software services and contributing only 3% to its overall enterprise value.
Kerrisdale Bets Against MSTR
Kerrisdale Capital declared its position, stating, “We are long on bitcoin and short on shares of MicroStrategy.” The firm highlighted that MicroStrategy’s stock price has surged alongside the recent spike in Bitcoin’s price. However, Kerrisdale Capital believes that the premium investors are paying for MicroStrategy’s shares compared to the actual value of Bitcoin is unreasonable.
The report indicated that MSTR’s current price implies Bitcoin’s price is $177,000, approximately two and a half times the price of Bitcoin. Kerrisdale Capital argues that with Bitcoin now easily accessible through various channels such as brokerages and crypto exchanges at a lower cost, there is no justification for paying such a high premium for MicroStrategy’s shares.
Kerrisdale’s Critique: MicroStrategy’s Bitcoin Accumulation
Kerrisdale Capital also criticized MicroStrategy’s strategy of accumulating Bitcoin through debt financing and equity offerings. Despite management’s claims of leveraging these funds intelligently, Kerrisdale Capital argues that the dilutive impact of these actions has offset any potential benefits.
The investment firm pointed out that MicroStrategy’s equity premium, currently at 2.6, is exceptionally high, far exceeding historical averages. Kerrisdale Capital believes that the current premium is unsustainable and expects it to revert to more reasonable levels in the future.
Adding to the scrutiny, GuruFocus also noted that from the price of $1,741.53, MicroStrategy shares significantly exceeded its GF Value, an intrinsic value estimate, of $248.02. This translates to a price-to-GF-Value ratio of 7.02, categorizing the stock as Significantly Overvalued.
MicroStrategy Stock Update
MicroStrategy stock experienced a decline following Kerrisdale Capital’s claims. On Thursday, March 28, MSTR shares closed at $1,704.56, an 11.18% decrease compared to the previous day’s closing price of $1,919.16. The slide continued on Monday, April 1, with the shares falling 5.02% as of 12:00 PM EDT to $1,611.39 per share. Kerrisdale Capital believes the appropriate valuation for MSTR stock is between $700 and $800 per share.
In the preceding month, the stock witnessed a surge of 66.65%, while over the last six months, it has undergone a remarkable rise of around 419%. The company’s market capitalization stands at $28.923 billion, with an average trading volume of 3.45 million shares over the past 10 days.
Despite the decline, Thursday’s closing price surpassed the 50-day moving average of $1,014.10 and the 200-day moving average of $581.09. The stock’s 52-week range demonstrates substantial volatility, with a high of $1,999.99 and a low of $266, with 15 million shares outstanding.
Analysts’ Outlook on MSTR
Four Wall Street analysts have recently provided their price targets for MSTR, averaging $1,346.67 over the next 12 months. Their forecasts range from a high of $1,810.00 to a low of $780.00. This average target represents a -21.00% change from the last closing price of $1,704.56. Despite the projected decline, analysts are still recommending buying MSTR stock.
IS MSTR Stock a Buy?
MSTR stock demands a nuanced evaluation due to recent events. The company unveiled its latest AI trading bot, and received endorsement from the University of Auckland. These advancements showcase MicroStrategy’s dedication to enhancing business intelligence solutions, promising improved productivity and accessible data.
Despite these innovations, Kerrisdale Capital’s critique of MicroStrategy’s substantial Bitcoin investment raises concerns about valuation. The subsequent stock price drop reflects investors’ apprehension. While some analysts predict a downturn, others maintain an optimistic outlook. Investors should, therefore, approach MSTR stock with a balanced perspective, considering its innovative potential and valuation risks before making investment decisions.
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