MicroStrategy (MSTR) has been a stable software business for two decades before 2020, underpinned by steady sales and profits. However, the company’s strategic pivot toward Bitcoin has significantly transformed its market perception and valuation.
Between 2010 and 2019, MicroStrategy operated within a consistent range for its Price-to-Sales (P/S) ratio, as shown below:
| Year | P/S Ratio |
|---|---|
| 2010 | 3.42 |
| 2011 | 4.66 |
| 2012 | 3.30 |
| 2013 | 3.57 |
| 2014 | 3.65 |
| 2015 | 3.86 |
| 2016 | 3.05 |
| 2017 | 3.79 |
| 2018 | 3.55 |
| 2019 | 3.93 |
| Average | 3.678 |
| Median | 3.61 |
| Standard Deviation | 0.4354 |
The median P/S ratio of 3.61 serves as a reasonable proxy for the valuation of the company’s operating software business (OpCo) prior to its Bitcoin strategy. Using this metric, we can estimate the value of the OpCo and isolate the “Bitcoin Premium” added to its market capitalization since the shift.
The following table highlights MSTR’s market cap, the value of its BTC holdings, the implied multiple of market cap to BTC value, the estimated OpCo value, and the resulting Bitcoin Premium:
| Quarter | MSTR MCap ($B) | MSTR BTC Value ($B) | MCap / BTC Value Multiple | OpCo Value ($B) | BTC Premium ($B) |
|---|---|---|---|---|---|
| Q3 2020 | 1.45 | 0.41 | 3.54 | 1.73 | -0.69 |
| Q4 2020 | 3.76 | 2.06 | 1.83 | 1.73 | -0.03 |
| Q1 2021 | 6.55 | 5.35 | 1.22 | 1.84 | -0.64 |
| Q2 2021 | 6.48 | 3.65 | 1.78 | 1.84 | 0.99 |
| Q3 2021 | 5.78 | 4.97 | 1.16 | 1.84 | -1.03 |
| Q4 2021 | 5.46 | 5.71 | 0.96 | 1.84 | -2.09 |
| Q1 2022 | 5.49 | 5.89 | 0.93 | 1.80 | -2.20 |
| Q2 2022 | 1.86 | 2.45 | 0.76 | 1.80 | -2.39 |
| Q3 2022 | 2.40 | 2.20 | 1.09 | 1.80 | -1.60 |
| Q4 2022 | 1.60 | 4.00 | 0.40 | 1.80 | -4.20 |
| Q1 2023 | 4.30 | 4.00 | 1.08 | 1.79 | -1.49 |
| Q2 2023 | 5.51 | 4.60 | 1.20 | 1.79 | -0.88 |
| Q3 2023 | 4.62 | 4.30 | 1.07 | 1.79 | -1.47 |
| Q4 2023 | 10.56 | 8.00 | 1.32 | 1.79 | 0.77 |
| Q1 2024 | 30.06 | 15.20 | 1.98 | 1.65 | 13.21 |
| Q2 2024 | 24.43 | 14.00 | 1.75 | 1.65 | 8.78 |
| Q3 2024 | 34.17 | 16.00 | 2.14 | 1.65 | 16.52 |
As of November 24, 2024, Microstrategy reported:
Michael Saylor continues to capitalize on MSTR's elevated valuation by issuing convertible senior notes. As long as the Market Cap / BTC Value Multiple remains above 1.0, he can use this premium as "free money" to accumulate more Bitcoin. At a multiple of 2.3 and a premium nearing $47 billion, MSTR remains a high-beta proxy for Bitcoin.
The key question: how long can this premium be sustained? As of Q4 2024, investors are still willing to pay a steep price for Saylor’s bet on Bitcoin.
Data Sources:
Microstrategy financials: Microstrategy investor relations page for 10-K and 10-Q reports.
Microstrategy stock market data: finance.yahoo.com
BTC price: coingecko.com
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