KBW analysts highlight the company’s appealing investment profile with outperform rating and $560 price target for leveraged Bitcoin exposure.
The transition to FASB’s fair value accounting rules aims to address $1 billion Q4 2024 loss and improve financial reporting.
The company’s rebranding and dual Bitcoin-AI strategy positions it for innovative growth in transformative technologies.
(formerly MicroStrategy) has gotten the financial community buzzing. In a recent research report, analysts from investment bank KBW described the company as an appealing investment for equity investors seeking leveraged Bitcoin exposure.
These KBW analysts of the business intelligence software company with an outperform rating and a $560 price target. The MSTR shares surged by 1% at around $329 in early trading.
MicroStrategy and FASB Updated Accounting Rules
Strategy submitted a letter to the Financial Accounting Standard Board (FASB) a while ago.
In the letter, it communicated its support for fair value accounting of Bitcoin and some other crypto assets. It is worth noting that the FASB has consistently updated its accounting guidelines, including that for BTC. In December, its new crypto fair value accounting rules .
There are expectations that the Michael Saylor-led firm will adopt this updated treatment in Q1 2025.
Analyst Bill Papanastasiou believes that the eventuality of this scenario could serve as a pivot for Strategy. In his words, the firm will move from an “outdated measurement approach to fair value accounting, with unrealized gains/losses flowing to net income.”
Strategy already attributed its loss of $1 billion in Q4 2024 to its initial misalignment with the new FASB rules. This time, it hopes to perform better once it adopts the fair value accounting rules.
Strategy Secondary Earnings Boost
To join the S&P 500 index, it is required that companies have positive net earnings in the last quarter and the sum of the previous four quarters, the report said.
Track records have shown that Strategy owns the “largest bitcoin treasury held by a public operating company”, the KBW analysts noted. In addition, Strategy boasts some tools that could expand its BTC stash.
Currently, the company has a thriving BTC yield system but hopes to receive yield on-chain from applications built on the Bitcoin network in the longer term. Notably, these expectations find root in the growing development of several applications atop the Bitcoin network.
Beyond Strategy, this move would unlock massive value for the broader cryptocurrency sector because of the network’s status as the most secure, decentralized, and valuable. Overall, the analyst believes Strategy is an attractive firm at the moment.
The Ultimate Bitcoin and AI Focus
Meanwhile, Strategy’s rebrand is quite strategic, reflecting its dual focus on Bitcoin and AI technology.
Also, the new orange branding is said to serve as a symbol of its crypto commitment. As part of this development, the company launched a new website with branded merchandise to engage the community. Phong Le, President and CEO of Strategy, :
“Strategy is innovating in the two most transformative technologies of the twenty-first century – Bitcoin and artificial intelligence. Our new name powerfully and simply conveys the universal and global appeal of our company, and the value we bring to the strategies of our shareholders, customers, partners, and employees.”
“Strategy is innovating in the two most transformative technologies of the twenty-first century – Bitcoin and artificial intelligence. Our new name powerfully and simply conveys the universal and global appeal of our company, and the value we bring to the strategies of our shareholders, customers, partners, and employees.”
Even Saylor mentioned that this change of name after 35 years of operation will go a long way in showcasing the firm’s vision of Bitcoin as a strategic investment.