MicroStrategy’s Returns Are 3X Higher Than Bitcoin: Time to Buy?
MicroStrategy (NASDAQ: MSTR) has become one way many investors have found to get into Bitcoin (CRYPTO: BTC). Looking at the returns of the two over the past three years, investing in MicroStrategy has been far superior to investing in Bitcoin. The total return over that time for each has been 177% versus 51%, respectively. But why is that the case?
Based on the reports of new Bitcoin purchases, the value of the company’s Bitcoin is around $16 billion today. However, the technology company’s market capitalization is $34 billion. Somewhere in MicroStrategy, investors see an extra $18 billion in value over just its cryptocurrency. So, where does this extra value come from?
Breaking Down MicroStrategy’s Lesser-Known Business: Software
Looking at MicroStrategy, there are two big parts of its business: bitcoin purchases and its software. The software business is based on its MicroStrategy ONE data analytics software. It offers business intelligence tools, allowing users to take advantage of machine learning and create custom analytics. Looking at this part of the business, revenues are declining.
From Q1 2023 to Q2 2024, revenue went from $122 million to $111 million, a drop of 9%. The business is unprofitable as well, and that unprofitability is getting worse. In Q1 2023, the software business’s net …
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