Investors have compared MicroStrategy to meme stocks in recent weeks as the data visualization and reporting platform piled into bitcoin at the end of last year, even as the cryptocurrency hit record after record. MicroStrategy, seen as a proxy for the price of bitcoin, benefited in the post-election bitcoin rally. Fueled by its five-year-old strategy of loading up on crypto, MicroStrategy, based in suburban Virginia outside Washington, soared 58% in November alone. Then the company co-founded by Michael Saylor gave back 25% in December as the crypto rally faded, but still soared 358% in 2024, one of the best performing stocks of the year. It even joined the Nasdaq-100 index, gaining inclusion in the heavily traded Invesco QQQ Trust exchange traded fund. MSTR 1Y mountain MicroStrategy, 1 year The combination of a sky-high stock price, surging popularity and a crypto-native cheering section on social media is leading some to question if MicroStrategy might really go the way of a meme stock —popular among retail investors on social media but risky and vulnerable to sharp downdrafts. Mark Palmer, an analyst at Benchmark Co. who rates MicroStrategy a buy, attributes this view to a lack of understanding of MicroStrategy’s novel bitcoin-buying strategy. “Anytime a new approach is taken in technology or on Wall Street, there are going to be skeptics who are rooted in the traditional ways of doing things who will say this new strategy is not sustainable,” Palmer told CNBC. “What we are seeing in terms of skepticism, with regard to Michael Saylor’s approach, is not only understandable, it was almost inevitable given the way that adoption signals typically work.” Church of bitcoin Saylor, today the company’s executive chairman, is a staunch bitcoin advocate and educator. He doesn’t shy from media interviews, industry events or any opportunity to deliver a sermon explaining why bitcoin is the premier asset class and engage with the crypto lovers and haters alike – at one point in December, even addressing a Microsoft shareholder meeting . His social media is filled with rocket ship emojis and images of him as a sort of religious icon for the church of Bitcoin. “What Michael Saylor has done over the past few years is draw attention to what MicroStrategy is doing by embracing social media and meme culture, so he has not balked at the notion of promoting MicroStrategy using over the top memes and things of that nature,” Palmer said. “I think he would view that as part of his role as an evangelist for bitcoin and MicroStrategy.” MicroStrategy began buying bitcoin in 2020. At the time, the strategy was “defensive in nature,” Palmer said. In the past year the approach became more offensive, with the company raising billions of dollars through the sale of convertible bonds for the sole purpose of buying more bitcoin. In 2024, MicroStrategy bought bitcoin 18 times, the last eight after the November presidential election. Today, it holds 446,400 bitcoins on its balance sheet, about 2% of the world’s total bitcoin supply. But with bitcoin’s notorious volatility, there’s concern that it will be worth less by the time the MicroStrategy debt comes due. However, the notes aren’t due until 2029, and there’s never been a five-year period in which the price of bitcoin was lower on any given day than five years prior, said Alex Miller, CEO of Hiro, a maker of tools for a network that enables apps and contracts for bitcoin. Surviving big hits Benchmark’s Palmer acknowledge that because MicroStrategy trades so closely with bitcoin, it’s likely to take a big hit when bitcoin does – and bitcoin is no stranger to 30% drawdowns even in a bull market. Historically, bitcoin has pulled back as much as 80% from the cycle peak. But MicroStrategy has already lived through a bitcoin bear market – it dropped 74% in 2022 alongside bitcoin’s 64% slump – and Saylor’s bitcoin buying strategy survived it. “There are definitely external factors, macroeconomic factors, that could cause MicroStrategy to adjust its approach but as we have seen – particularly at the end of 2022 – even when the crypto markets have been in disarray and there were skeptics screaming that crypto is dead, the company was able to preserve its optionality,” Palmer said. “There was no trigger, no catalyst, that was able to completely undermine what it was doing. MicroStrategy went through that, came out the other side and was able to embark on an even more aggressive approach to what it was doing during the second half of 2024,” he added. Accelerated adoption of bitcoin by institutional investors and corporations alike, driven by expected regulatory reform of crypto in 2024, could drive bitcoin as high as $225,000 this year, an analyst at H.C. Wainwright, a 156-year-old investment bank, said last week. That’s likely to translate into even more aggressive purchases by MicroStrategy. Saylor has likened buying bitcoin to investing in Manhattan real estate, saying his company will “keep buying the top forever.”
