By
Steve Muchoki
April 24th, 2024
The downgrade of the MicroStrategy stock from Neutral to Sell has its toll on investor’s sentiment and it is reflected in the current MSTR stock price.
Citigroup Inc (NYSE: C) appears not to be so intrigued by the bullish run of MicroStrategy Incorporated (NASDAQ: MSTR), an American Business Intelligence, mobile software, and cloud services firm focused on Bitcoin (BTC) investments. As reported by Cointelegraph, Citigroup analyst Tyler Radke downgraded MSTR stock from neutral to sell despite the company’s latest moves to shore up its Bitcoin reserves.
Radke backed his new rating on MicroStrategy citing the firm’s “Disproportionate” focus on Bitcoin. Radke said in his note:
“MSTR’s bitcoin investment has returned $250M (or worth $26/share or +20% towards stock) since August ’20. While impressive, it pales in comparison to the 172% return in the stock. At the current stock price, our analysis suggests that the market is pricing in much more optimistic valuation scenarios for the core business and Bitcoin.”
Bitcoin despite the growing embrace it has seen thus far this year cannot be ruled out as a volatile and unregulated asset whose growth trajectory is outrightly unpredicted. Before hitting a new all-time high early this month when it traded at $19,783, setting a new pace, the coin traded as high as $19k back in December 2017. With that unprecedented growth for an asset that was worth less than $1 less than a decade before then, the price crashed remarkably earlier this year creating doubts about the future prospects of a near-term surge.
The coronavirus however has created an enabling environment for Bitcoin to regain its bullish tendencies as most retail and institutional investors alike now saw in it an asset suitable to displace gold as a hedge against inflation. MicroStrategy ranks as one of the early vocal Wall Street firms that adopted Bitcoin this year, and its pursuit of the digital currency as its primary reserve asset has called for concern.
MSTR Stock Plummets following the Citigroup Downgrade
The revision of the MicroStrategy stock from Neutral to Sell has its toll on investor’s sentiment as reflected in the current stock’s price. The stock closed trading on Tuesday with a down-plunge of 13.91% to $289.45. Improvements are not currently seen in the pre-market trading as the MSTR stock is dropping by an additional 0.85% at the time of writing.
Nonetheless, MicroStrategy CEO, Michael Saylor has revealed his ever bullish stance on Bitcoin, noting that Bitcoin is “a million times better than gold” and “God’s name is Satoshi” as gleaned by Decrypt in an interview organized by Binance cryptocurrency exchange. In the interview which also featured Binance CEO Changpeng Zhao, Saylor noted that:
“If God designed virtual gold in cyberspace, he would’ve designed Bitcoin. People that know this know that God’s name is Satoshi.”
Besides his firm’s total of more than 40,000 BTC in its reserve with plans to buy additional coins through a proposed Convertible senior note, Saylor once prides himself on having about 17,732 BTC of his own now worth about $330 million.