Key Points to Consider
Saylor’s revised guidance has drawn criticism, labeled as “inconsistent” by some, yet Wall Street experts remain optimistic about MicroStrategy (MSTR). The key question is whether the stock can maintain its position above the 200-day Simple Moving Average (SMA).
Michael Saylor has modified his prior strategy concerning equity ATM (at the market) offerings. This updated approach allows for the sale of MSTR shares to fund further Bitcoin [BTC] acquisitions, even if the stock’s premium decreases.
Announced via a statement on X (formerly Twitter) on August 19th, Saylor indicated that this adjustment would bolster Strategy’s capital deployment strategy focused on Bitcoin.
“Today, Strategy released an updated version of its MSTR Equity ATM guidelines, designed to provide enhanced flexibility in the execution of our capital markets plan.”
Source: Strategy
Controversy Arises From Saylor’s Decision
In contrast to the directives issued earlier this August, the company will now proceed with selling MSTR shares to invest in BTC, even if the modified net asset value (mNAV) falls below 2.5x.
For clarification, mNAV represents the premium or discount at which the stock is trading relative to its cryptocurrency holdings. It is a crucial metric for assessing the valuation of crypto treasuries.
Currently, MSTR’s mNAV is trading at 1.59x, a decrease from the 3.89x recorded last November.
This recent guidance has sparked division among market observers. Some critics argue that reversing the previous stance in such a short timeframe may erode investor confidence. A comment from a user on Reddit stated,
“The mNAV guidance left a sour taste when initially presented, and this reversal only worsens it. It doesn’t inspire confidence as a shareholder.”
Source: Reddit
Similar negative reactions were observed on Crypto Twitter, with one user calling the updated strategy ‘careless.’
On the other hand, Jeff Walton, a vocal supporter of MSTR, responded to criticism, suggesting that the fear, uncertainty, and doubt (FUD) would diminish by October.
Notably, Strategy has acquired an additional 430 BTC (valued at $51.4 million), bringing their total Bitcoin holdings to 629,376 BTC (approximately $74 billion).
This latest purchase wasn’t completely unexpected, as Saylor had hinted at it the previous day.
Source: Bitcoin Treasuries
Concurrently, amidst a Bitcoin retracement, MSTR has experienced a decline of over 20%, moving from above $457 to a crucial support level at $360.
Despite this, TD Cowen has maintained a positive outlook, assigning a price target of $680 following the latest Bitcoin acquisition. Furthermore, a consensus of ten Wall Street analysts have issued “buy” ratings for the stock, indicating a potential upside of over 50%.
Source: MSTR/TradingView