Adam Back, the CEO of blockchain technology firm Blockstream, recently took to the social media platform X (formerly known as Twitter) to share his thoughts on MicroStrategy (MSTR) and its valuation relative to its significant Bitcoin holdings. His comments, made on Dec. 7, focused on the stock’s apparent mispricing, the importance of maximizing Bitcoin per share, and the dynamics of its treasury premium. MicroStrategy, led by Bitcoin proponent Michael Saylor, has become a go-to stock for investors seeking exposure to Bitcoin.
Back began by stating that MicroStrategy’s stock appears undervalued, estimating the current BTC per 1,000 shares at 3.9–4.1 BTC. He believes this figure should be closer to 5.0–6.0 BTC, suggesting that the market has yet to fully price in the company’s Bitcoin holdings or potential future growth.
He also pointed out the concept of a “treasury premium,” which he estimates at around 2x currently but believes could rise to 2.5x–3x under certain conditions. This premium reflects the added value investors assign to MicroStrategy’s strategy of leveraging Bitcoin as a treasury asset.
Back argued that factors such as additional Bitcoin acquisitions, inclusion in the S&P 500 index, and positive news sentiment—like Bitcoin reaching new all-time highs—could drive this premium higher. Based on these projections and a Bitcoin price of approximately $100,000, Back sees MSTR’s fair value ranging from $485 to $585 per share.
A key point Back emphasized is that increasing the BTC per share ratio is the most important metric for MicroStrategy’s success. He noted that every strategic decision should aim to maximize this ratio, as it determines how well the stock tracks Bitcoin’s price movements. To achieve this, he believes that MicroStrategy could take one of two approaches.
The first is issuing new shares at a lower net asset value (NAV) to raise capital for purchasing additional Bitcoin at cheaper prices, which would likely increase BTC per share over time. The second approach involves allowing NAV to rise, giving the company more purchasing power but risking higher Bitcoin prices when acquisitions are made. Back said that while the method may vary, the result is what truly matters, as MicroStrategy shares tend to exhibit a 1.5x beta relative to Bitcoin, meaning they amplify Bitcoin’s price movements.
Finally, Back talked about the treasury premium and how it behaves in different market conditions. He explained that the premium naturally contracts during bear markets due to MicroStrategy’s leverage, which temporarily limits its ability to raise funds through methods like at-the-market (ATM) offerings or convertible debt. However, he noted an interesting alternative: MicroStrategy could sell some of its Bitcoin holdings to repurchase shares, effectively increasing BTC per share if the stock is trading at a discount. This would align with the goal of maximizing the BTC-to-share ratio, though Back acknowledged that such a move would depend on the circumstances.
MicroStrategy’s share price closed at $395.01 on Friday, up 476.49% in the year-to-date period.
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