Key Points
- Despite Bitcoin’s record high, MicroStrategy’s stock price has dropped 27% from its peak this year.
- The stock’s decline is attributed to profit-taking and concerns over its valuation.
MicroStrategy’s stock price has experienced a 27% fall from its top mark this year, even though Bitcoin hit an all-time high.
On December 6, MSTR shares were trading at $390, continuing a slump that started on November 21, when the shares reached their peak at $541. Despite this setback, MicroStrategy has still been one of the top performers this year, with an over 500% increase and a market cap surpassing $91 billion. It also ranks as the highest gainer in the Russell 2000 index.
Reasons Behind the Stock’s Decline
Two factors could explain the stock’s retreat this month. First, investors who have profited from its rise are likely taking profits.
Second, there are concerns about the stock’s valuation, which is around $91 billion. This is a significant premium, given that MicroStrategy holds 402,100 coins valued at less than $40 billion. This leaves a $50 billion gap that the company’s struggling original data analytics business can’t fill.
As a result, some investors think the company’s valuation will eventually decrease to bring it closer to its Bitcoin (BTC) holdings.
Analysts’ Views and Stock Performance
However, many Wall Street analysts remain positive, believing the stock has room for further growth. Cowen, Barclays, Benchmark, and Bernstein are among the most bullish analysts, according to Yahoo Finance. The average stock estimate is $492, higher than the current $390.
The performance of MicroStrategy’s stock has also paralleled that of other companies exposed to Bitcoin. Marathon Digital, the second-largest Bitcoin holder, has seen a 14% drop from its November peak. Similarly, Coinbase, Riot Platforms, and Hut 8 Mining have also seen pullbacks.
Future of MSTR Stock
Despite its pullback, MicroStrategy’s stock remains above the ascending trendline that connects the lowest swings since November 11. It is also trading above the 50-day and 100-day moving averages, suggesting potential support for additional gains.
The stock has also reached the strong pivot reverse point of the Murrey Math Lines tool, indicating that the stock could rebound if Bitcoin continues to rise. If this occurs, the stock could continue its upward trajectory as bulls aim for the all-time high of $540. A break above this level could lead to more gains, potentially up to the extreme overshoot level at $625.
However, if the stock falls below the rising trendline, it could trigger a mean reversal and drop to the 100-day moving average at $240. This price aligns with the major S&R level of the Murrey Math Lines.
