MicroStrategy may extend surge as investors embrace bitcoin strategy, says Bernstein

MicroStrategy shares could nearly double in value by the end of 2025 as investors are willing to pay a premium for the software firm's bitcoin investing strategy, brokerage Bernstein said, starting coverage with an "outperform" rating.

The company's stock has more than doubled this year, while bitcoin has gained more than 50%, fueled by the U.S. securities regulator's January approval of exchange-traded funds (ETFs) tied to the spot price of the cryptocurrency.

The brokerage on Thursday set a Street-high target of $2,890, compared to the stock's last close of $1,483.88, as MicroStrategy has become a popular proxy to gain exposure to bitcoin, especially among investors looking to avoid holding the cryptocurrency directly because of regulatory or other concerns.

The company held 214,400 bitcoins as of April 26, worth nearly $14.3 billion, based on Thursday's price.

"MicroStrategy's founder-chairman, Michael Saylor, has positioned himself to be synonymous with brand bitcoin," the analysts wrote, lauding the transformation "from a small software company to one of the largest bitcoin holding companies."

Some analysts have warned that the spot bitcoin ETFs could chip away market share from companies such as MicroStrategy. But the "active" strategy employed by the company could help it command a premium valuation, Bernstein said.

MicroStrategy has tapped capital markets multiple times this year to raise funds through convertible note offerings to increase its exposure to bitcoin.

On Friday, the company upsized its latest convertible debt offering to secure $700 million, compared with its initial target of $500 million.

All analysts covering MicroStrategy rate the stock "buy" or higher and their median price target is $1,837.50, according to LSEG data.

Meanwhile, Bernstein predicted bitcoin to breach the $1 million mark by 2033, driven by unprecedented demand and limited supply.