Two Big Bitcoin Catalysts Could Drive MicroStrategy Stock Gains, TD Cowen Says

• Bitcoin's price may soar this month and so, too, might the shares of MicroStrategy, which owns billions of dollars worth of BTC, a TD Cowen analyst said.
• MicroStrategy is poised to be "meaningfully higher" at the end of the year, Lance Vitanza said.

Bitcoin BTC$105,247.40 has significant upside potential this month thanks to two big catalysts and Michael Saylor's MicroStrategy (MSTR) stock could surge, too, on its way toward getting "meaningfully higher" by the end of the year, TD Cowen analyst Lance Vitanza said in a note Monday.

Last week, MicroStrategy reported a net operating loss of $53.1 million for the first quarter of 2024 after taking a digital asset impairment charge of $191.6 million. But the company hasn't adopted a new digital asset fair value accounting standard that would’ve given it a sizable profit from bitcoin’s rally at the beginning of the year.

Read more: FASB's Crypto Accounting Shakeup Could Lure More Corporate Investment, Michael Saylor and Others Argue

Vitanza, who attended MicroStrategy’s World 2024 user forum in Las Vegas last week, however, said customers had significant positive feedback regarding the firm’s legacy software business, founded long before Saylor pushed the company to purchase billions of dollars of bitcoin. “This is causing us to rethink the potential upside around the operating business,” he wrote.

The company’s stock, which is up 89% year-to-date, could also see meaningful upside due to two main catalysts that could drive up the price of bitcoin.

May 15 marks the deadline for institutional investment managers to file form 13-F with the Securities and Exchange Commission. If more firms are shown to have purchased the newly approved spot bitcoin exchange-traded funds during the first quarter, this will show bitcoin has gained further institutional acceptance, the analyst said.

Vitanza said another event that could be positive for bitcoin and, thus, MicroStrategy, will be the SEC's likely rejection of an ether ETF, which many in the industry are girding for.

“This is significant because while Ethereum's fate may remain up in the air until 2025 or longer, we believe there's a substantial amount of capital waiting for a digital winner to be declared; to the extent Bitcoin proves to be that winner, the incremental demand would likely be felt even more acutely given the recent bitcoin halving,” Vitanza said.

Bitcoin is up 43% since the start of the year and reached a fresh all-time high above $73,000 in March, according to CoinDesk data. It is currently trading at $63,000.