News - Can MicroStrategy overtake Apple in the future?

By Luc Vesters

Can MicroStrategy overtake Apple in the future?

Bitcoin (BTC)
Investing

In August 2020, the software company MicroStrategy made its first investment in Bitcoin publicly. At the time, it stood Bitcoin still under $10,000, and in retrospect, the timing of the investment turned out to be a good choice. A short time later, the new bull cycle began for the crypto market, which eventually took BTC to just under $70,000 in November 2021. The investment could have generated strong returns at that time.

However, Michael Saylor, founder of MicroStrategy and the driving force behind the Bitcoin strategy, has other plans. Selling Bitcoin is not an issue for him. On the contrary, investing in the digital currency is regularly increased. But this very approach of the Bitcoin maximalist proved to be an increasing problem in late 2022. Further purchases of BTC in the 2021 bull market in price ranges of USD 40,000 and USD 50,000 eventually caused the average purchase price to rise to around USD 30,000. At current BTC prices above USD 40,000, this is certainly a favorable entry price. But how high would the price have to rise for MicroStrategy to catch up with Apple? We did the math.

When BTC/USD plunged below $16,000 following the FTX crash in November 2022, some analysts were already predicting financial trouble for MicroStrategy. "The software business must recover to avoid forced sales of BTC," wrote market research firm Blockworks Research in a market report last November. Unrealized losses sometimes exceeded $1 billion.

Unrealized profits in the billions

But no one is laughing at Michael Saylor anymore. The Bitcoin rally this year has turned the tide. With the latest purchase of 16,130 BTC at the end of November, the MicroStrategy according to official figures now owns a total of 174,530 Bitcoin. This makes the company one of the world's largest Bitcoin hodlers. At the current Bitcoin price of about USD 41,500, the total value is currently USD 7.2 billion. The unrealized loss has turned into an unrealized gain in the billions.

MicroStrategy is benefiting from its Bitcoin bet in two ways. Investors are becoming increasingly convinced of the investment strategy, and demand for the company's stock has surged in 2023. In the past 12 months, MSTR's share price has increased by more than 280 percent increased.

Michael Saylor did not miss the opportunity to celebrate this success. A few days ago, he published a chart on the social network X, showing that MicroStrategy's value has increased 385 percent since its initial Bitcoin investment. This means the performance has outperformed even the price of Bitcoin, which has risen 274 percent over the same period. In contrast, the S&P 500 and Nasdaq stock indexes have risen "only" 37 percent and 31 percent, respectively, since August 2020. Gold, silver and bonds have performed much less well, although the price of gold has risen sharply recently.

Bitcoin price is expected to rise to more than US$17 million

Yet MicroStrategy's market capitalization remains relatively low compared to the world's most valuable assets. According to Marketscreener MicroStrategy's market value is currently $8.69 billion. By comparison, Bitcoin is currently worth US$820 billion. Apple, the most valuable company, is worth US$3 trillion and the market capitalization of gold is just under US$13.5 trillion, according to figures from CompaniesMarketcap.

By comparison, MicroStrategy still seems like a relatively small fish. But could this change in the future? How high would the price of Bitcoin have to rise for MicroStrategy to be worth more than Apple?

Assuming the fictional assumption that Apple keeps its market capitalization constant in the future and MicroStrategy stops buying bitcoins, the price per digital coin would have to rise to US$17.189 million for the investment to reach Apple's market value. This seems an ambitious goal, even for Bitcoin maximalist Michael Saylor, who has previously mentioned a price target of US$5 million per Bitcoin in interviews.

Therefore, it seems quite unlikely that MicroStrategy can become the most valuable company in the world with its investment. Nevertheless, strong profits remain as long as the BTC price does not fall below USD 30,000.

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