MicroStrategy Stock is Ripping Higher Again This Morning, But Should You Buy?

Shares of MicroStrategy (MSTR) are up more than 4% ahead of the opening bell this morning, on track to add to their year-to-date gains of 515.6%. The enterprise software stock is tracking gains in Bitcoin (BTCUSD), which is cruising past $97,000 to start this Friday.

MSTR stock has been notably volatile, primarily due to its substantial Bitcoin holdings and its close ties with the cryptocurrency's price fluctuations. In fact, its popularity as a proxy asset to gain exposure to Bitcoin has led MSTR stock to outperform the benchmark cryptocurrency itself. That relative outperformance was a primary consideration behind a recent bearish note from short seller Andrew Left of Citron Research, which sparked a drastic, but short-lived, plunge in MicroStrategy's share price on Nov. 21. 

The company's strategy of leveraging debt to acquire Bitcoin has been both praised for its boldness and criticized for potential financial risks. In part, Citron's Left noted that the growing availability of spot Bitcoin ETFs and related derivatives diminishes the “Bitcoin proxy premium” MSTR should be able to command. 

On the other hand, analysts have raised their price targets for MicroStrategy, citing its aggressive Bitcoin acquisition strategy as a potential growth driver, though concerns about overvaluation persist. Now valued at a market capitalization of approximately $78.8 billion, MicroStrategy stock has delivered a remarkable one-year return of 697%.

Analysts unanimously rate MSTR a “Strong Buy,” and its price performance is inarguably exceptional. However, given the stock’s close correlation with notoriously volatile Bitcoin prices, as well as lingering valuation concerns, MSTR likely warrants some caution around current levels.