Prominent investment adviser Gary Black has raised serious concerns about the valuation of MicroStrategy Incorporated (MSTR), arguing that the stock of the company may in fact be significantly overpriced. In a recent post on X, Black, managing partner at The Future Fund, expressed confusion after pointing out that the Bitcoin (BTC) holdings of MicroStrategy were valued at $31.2 billion at the time, with a net debt of $4.2 billion, resulting in an equity value of around $27 billion. Yet, its market cap stood at an eye-popping $106 billion. Ascertaining True Value Black believes the stock should be trading at around $105 per share, 75% lower than its current price. He also criticized the software business of MicroStrategy, which showed a 10.3% year-over-year revenue decline, as failing to drive meaningful growth. To Black, the strategy which the company has adopted seemed comparable to issuing debt or cash and buying marketable securities, something anyone can do with Bitcoin, making it a questionable basis for long-term growth. Instead of relying on future earnings projections, Black advocates for valuing companies based on their core business and assets. In this case, he combines the value of the aforementioned software operations with the substantial Bitcoin holdings to assess its true worth. Why This Matters The critique by Black comes on the heels of a recent BitMEX report that found MSTR is trading at a 256% premium compared to the net asset value (NAV) of its Bitcoin assets. The report suggested that investors, discouraged by financial regulators restricting Bitcoin ETF purchases, may be turning to MicroStrategy as an alternative way to gain exposure to Bitcoin. The bold Bitcoin acquisition strategy adopted by Micheal Saylor has been the subject of intense media attention in recent weeks. As co-founder, Saylor recently revealed that MicroStrategy was raking in $500 million a day as Bitcoin approached $100,000.
