Only a few corporations have market caps above $1 trillion. All save Warren Buffett's Berkshire Hathaway are high-growth tech companies. The next big $1 trillion firm will likely be another tech company.
What if the next $1 trillion business is crypto? These are the goals of MicroStrategy Inc. (NASDAQ: MSTR), whose large Bitcoin (CRYPTO: BTC) holdings have skyrocketed. MicroStrategy has beaten every S&P 500 company since 2020, rising 264% this year. Is MicroStrategy going to be the first $1 trillion crypto stock?
MicroStrategy's financial statement shows 252,220 Bitcoins worth $17 billion at today's pricing. This becomes MicroStrategy the world's biggest Bitcoin corporate holder. MicroStrategy has almost 1% of Bitcoin in circulation.
It seems the firm will continue. Since 2020, MicroStrategy has bought Bitcoin practically every month. MicroStrategy is buying more Bitcoin. Convertible debt is the company's latest plan to acquire additional Bitcoin.
The way to $1 trillion is simple: Buy as much Bitcoin as possible and wait for it to rise. MicroStrategy founder and executive chairman Michael Saylor believes Bitcoin may reach $13 million by 2045, making a trillion-dollar value possible.
Saylor introduced a fresh plan in October. The goal is to turn MicroStrategy into an investment bank from corporate software. Saylor says: "The endgame is to be the leading Bitcoin bank, or merchant bank, or you could call it a Bitcoin finance company."
MicroStrategy will establish new Bitcoin capital market instruments as part of this strategic change. See MicroStrategy as a big Wall Street investment bank that uses Bitcoin instead of dollars, like Goldman Sachs or Morgan Stanley.
Saylor aims to lead Bitcoin's global financial sector growth when it becomes a $100 trillion asset class. Getting paid in Bitcoin instead of dollars is more lucrative and safer for risk management, in his opinion.
MicroStrategy creating a trillion-dollar firm seems unlikely, right? MicroStrategy is just $50 billion. MicroStrategy is now an enterprise software firm, not a Bitcoin investment bank.
If you make one assumption, the $1 trillion value calculation works. Given that MicroStrategy is a Bitcoin proxy stock, Bitcoin's price need to rise 20-fold. The company's $50 billion value helps reach $1 trillion.
Many price estimates expect Bitcoin to achieve that. Ark Invest's Cathie Wood predicts Bitcoin will reach $1 million by 2030. She predicted $3.8 million for Bitcoin in April. With Bitcoin's $68,725 price, your value rise is 20-fold.
Outside of the crypto sector, how many individuals predict Bitcoin will reach $1 million by 2030? Bitcoin requires a 70% compound annual growth rate over the next five years.
From past history, Bitcoin loses more than half its value in some years. Bitcoin lost 65% in 2022. Thus, assuming Bitcoin's price to rise steadily for years is foolish.
Buying MicroStrategy depends on your Bitcoin future outlook. If you believe Bitcoin will rise, so should MicroStrategy. That makes the firm attractive for investment.
Remember that if Bitcoin's price drops dramatically, MicroStrategy and other heavily leveraged companies might suffer long-term consequences.
