Investment bank Citi has officially initiated coverage of MicroStrategy with a “Buy/High Risk” rating and set a 12-month price target of $485. Citi analysts feel that the company, under Michael Saylor’s leadership, has transformed itself into a “digital-asset treasury” firm whose value is deeply leveraged to the performance of Bitcoin.
At the heart of Citi’s bullish outlook is a forecast that Bitcoin will hit $181,000 within the next year, representing a ~63% upside from current levels. Citi also models MicroStrategy’s net‐asset‐value (NAV) premium at roughly 25–35%, which aligns historically with the company’s 2.5–3.5× ‘Bitcoin yield’ multiple. Simply put, if Bitcoin rises, MicroStrategy is expected to rise more, a leveraged play on the crypto rally.
Citi’s caveat
However, Citi is quick to point out that this leverage could go both ways. MicroStrategy’s fortunes are almost entirely tied to Bitcoin, any meaningful drop in the crypto can translate into outsized downside. In a bear scenario where Bitcoin falls 25% and the NAV premium flips to a 10% discount, Citi estimates MicroStrategy shares could fall roughly 61%.
Moreover, Citi points out that the company’s actual software business is now only a small part of its valuation, meaning the stock is essentially a Bitcoin proxy with corporate overhead.
MSTR versus BTC
Over the past 12 months, MSTR stock has delivered ~ +200-220% total return. In the same stretch, Bitcoin has posted strong returns, though typically lower than MSTR’s leverage effect. Even the NAV premium, which reflects how much extra investors are willing to pay above the underlying Bitcoin assets, might tell a different story.
Several analyses peg MSTR’s NAV premium at ~2.7x, however, during prior peaks, MSTR has traded at 3.4x i.e. 240%+ premium. Analysts caution that the premium is volatile and structurally unsustainable in the long run, as arbitrage and competition (e.g. BTC ETFs) could erode it over time. More importantly, share issuance to fund further Bitcoin buys can dilute the per-share BTC backing and pressure the premium if not accretive.
As Citi puts it, MicroStrategy may “go up if Bitcoin goes up and won’t if it doesn’t.”