MicroStrategy Incorporated (NASDAQ:MSTR), a software company based in United States, maintained its current share price over the past couple of month on the NasdaqGS, with a relatively tight range of $131.04 to $140.96. However, does this price actually reflect the true value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MicroStrategy’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for MicroStrategy
What’s the opportunity in MicroStrategy?
According to my valuation model, the stock is currently overvalued by about 76%, trading at $139.75 compared to my intrinsic value of $79.28. This means that the opportunity to buy MicroStrategy at a good price has disappeared! In addition to this, it seems like MicroStrategy’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of MicroStrategy look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for MicroStrategy, at least in the near future.
What this means for you:
Are you a shareholder? If you believe MicroStrategy should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on MicroStrategy for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on MicroStrategy. You can find everything you need to know about MicroStrategy in the latest infographic research report. If you are no longer interested in MicroStrategy, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.