MicroStrategy, a company that identifies itself as a Bitcoin Development Company, has seen its stock performance soar in relation to Bitcoin’s price, reaching a premium not seen in over three years.
The company’s net asset value (NAV) premium, which is calculated by comparing its market capitalization to the value of its Bitcoin holdings, has climbed to approximately 2.5. As of the last market update, MicroStrategy’s market cap stood at around $37.14 billion, while its 252,220 Bitcoin were valued at $15.1 billion.
In addition to the NAV premium, the ratio of MicroStrategy’s stock price to Bitcoin’s price has also reached its highest level since the company began investing in Bitcoin in August 2020.
Following the launch of spot Bitcoin exchange-traded funds (ETFs) in January, there was much speculation about how companies like MicroStrategy would fare. Since then, MicroStrategy’s stock has surged over 240%, significantly outperforming Bitcoin, which has seen a 16% decline since its peak in March.
Since adopting Bitcoin as a key asset, MicroStrategy has actively used various financial strategies, including equity offerings and convertible notes, to expand its Bitcoin reserves. This approach has led to an increase in Bitcoin per share, currently at 0.0012, benefiting shareholders despite some dilution from these financing methods.
MicroStrategy has introduced a new performance metric called “Bitcoin Yield,” which measures the growth of its Bitcoin holdings relative to its diluted shares. This metric rose to 5.1% in the second quarter, indicating positive growth.
With MicroStrategy’s ongoing commitment to accumulating Bitcoin and investors looking for higher returns, the NAV premium could potentially sustain itself for an extended period.
