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Is it too late to buy MicroStrategy stock as its bitcoin stash surpasses 114,000?

on Oct 29, 2021
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  • MicroStrategy shares on Friday edged lower 1.2% after announcing its most recent quarterly results.
  • The company reported its fiscal Q3 results Thursday after markets closed, beating revenue estimates.
  • Its bitcoin holding grew to a record 114,000 making it the largest publicly-listed corporate owner.

On Friday, MicroStrategy Corp (NASDAQ:MSTR) shares rallied before pulling back later to swing to a net intraday loss of 1.2%. The company reported its most recent quarterly results Thursday after markets closed, beating analyst estimates on revenue. MicroStrategy’s bitcoin holding increased to a record 114,000, making the crypto investor the largest publicly-listed corporate owner.

The company posted FQ3 earnings per share of -$3.61 compared to the expectation of $0.64. On the other hand, revenue for the quarter increased marginally to $128 million, slightly beating expectations by $0.52 million.

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The company added nearly 9,000 bitcoins to its holdings during the quarter.

MicroStrategy shares are up nearly 67% this year and more than 338% over the last 12 months.

MSTR shares look overvalued

From an investment perspective, MicroStrategy shares trade at a steep forward P/E ratio of 115.72, making the stock less attractive to value investors. 

In addition, the company’s growth prospects are less exciting with analysts predicting earnings per share to decline by 123.40% this year, before increasing at an average annual rate of 10% over the next five years.

Therefore, given the current valuation of the stock and this year’s rally it may be best to wait for the stock to pull back significantly before buying.

Source – TradingView

Technically, the stock seems to be trading within a gently ascending channel formation in the intraday chart. However, it has recently pulled back to avoid surging into overbought conditions, thus creating room for more upward movement.

Nonetheless, with shares far from reaching oversold conditions, investors could target extended pullbacks at about $616.25, or lower at $525.45, while $798.29 and $883.57 are crucial resistance levels.

MSTR is perfect for swing trading

In summary, given the volatility of MicroStrategy shares, the stock is perfect for short-term trading, as it mimics the movement of bitcoin price. 

Therefore, with the current pullback yet to reach oversold conditions, investors could still short the stock as it continues the downward movement.