On Tuesday, Microstrategy Inc. (NASDAQ:MSTR) shares edged slightly lower 2% after announcing adding 3,907 bitcoins to its holding. The company now holds 108,992 bitcoin, valued at approximately $5.26 billion based on the BTC/USD price of about $48,250 as of this writing.
In total, Microstrategy acquired its bitcoins at a cost of $2.92 billion, or about $26,769 per bitcoin. The company funded the Q3 bitcoin purchase by selling additional 238,053 shares through its ATM Facility (an open market sale) at a gross price of $753.21 per share. The MSTR stock traded at $704.16 as of this writing.
So, should you buy Microstrategy shares now?
From a valuation perspective, Microstrategy shares trade at a steep forward P/E ratio of 115.52, making the stock attractive to value investors. Moreover, with analysts expecting its earnings per share to fall by more than 123% this year, growth investors could also find the stock too expensive at current growth prospects.
However, Microstrategy’s stock price mirrors the bitcoin price due to the investment in the cryptocurrency market. At the current stock price of about $704 per share, MSTR has a market capitalization of $6.86 billion, meaning its bitcoin holdings value of $5.26 billion accounts for approximately 77% of the market value.
Therefore, if the BTC/USD price continues to rise, the MSTR stock price could soar significantly. As a result, investors willing to overlook the volatility may find Microstrategy shares compelling.
Technical overview: Microstrategy stock price forecast for Q3 2021
Technically, Microstrategy shares seem to be trading within an ascending channel formation in the intraday chart. Moreover, despite recently bouncing off the trendline support, the stock is yet to hit overbought conditions.
Therefore, investors can target extended short-term gains at approximately $798.29 or higher at $883.57. On the other hand, those expecting a pullback can target downward profits at $616.25 and $525.45.
Bottom line: the case for buying Microstrategy shares now
In summary, although Microstrategy shares seem to be trading at a steep forward P/E ratio, the stock price relies heavily on the bitcoin price. Therefore, with the pioneer cryptocurrency currently on an upward trajectory, the MSTR stock could extend current gains closer to $800. As a result, MSTR seems like a solid buy s crypto optimism continues to fuel the BTC/USD price.