A Look at MicroStrategy (MSTR) Valuation After IRS Eases Crypto Tax on Unrealized Bitcoin Gains

The U.S. Treasury and IRS have issued new guidance that allows companies to ignore unrealized gains and losses on digital assets when calculating exposure to the 15% corporate alternative minimum tax. Strategy, which has significant Bitcoin holdings, stands to benefit because this move will remove the threat of a large tax bill tied to price swings in its crypto reserves.

See our latest analysis for Strategy.

It’s been an intense year for Strategy, marked by volatility in Bitcoin, which drives much of the stock’s movement, and headline-making events from new digital credit launches to surges and retreats in its crypto holdings. Despite frequent news and operational changes, the share price return has been largely flat year-to-date, but long-term shareholders have still notched an impressive 20% five-year total shareholder return. With regulatory risks easing and fresh capital raises boosting its Bitcoin treasury, momentum is mixed, but the outlook remains tied closely to crypto sentiment and regulatory developments.

If Strategy’s wild ride has you watching the market, now’s the perfect time to discover fast growing stocks with high insider ownership.

With recent tax concerns fading and analyst targets still far above current prices, investors are left asking whether Strategy stock is trading at a bargain or if the market has already factored in future growth prospects.

Most Popular Narrative: 46.9% Undervalued

According to BlackGoat, the fair value implied by the narrative is almost double the last closing price of $352.33, suggesting significant upside. The rationale hinges on bold execution of capital plans, Bitcoin appreciation, and newly achieved GAAP profitability.

“With this, Strategy now qualifies for consideration in America’s most tracked index. According to independent estimates, it has generated over $11 billion in net profit over the past year due to fair value gains. Although inclusion is not guaranteed (the S&P committee exercises full discretion), Strategy’s eligibility means that any S&P 500 index investor could soon gain indirect Bitcoin exposure through the company’s shares. This would mark a milestone moment: the first time Bitcoin becomes a part of the S&P 500, even if by proxy.”

Read the complete narrative.

Want to know the story behind this sky-high value? The key: big Bitcoin bets, new capital plans, and an accounting change that flipped profitability. Curious how aggressive expansion, Bitcoin strategy, and future profit projections all combine to create this massive disconnect between price and value? Click to see the boldest assumptions and the detailed blueprint behind this valuation.

Result: Fair Value of $663 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, if Bitcoin volatility surges or new competitors flood the market, Strategy’s premium could shrink quickly. This would challenge even the most bullish scenario.

Find out about the key risks to this Strategy narrative.

Build Your Own Strategy Narrative

If you see things differently or want to dive into the numbers yourself, it takes just a few minutes to craft your own view. Do it your way.

A great starting point for your Strategy research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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