Jefferies Downgrades MicroStrategy to 'Underperform;' Shares Slump

The company holds 129,200 bitcoins, which translates into a $1 billion unrealized loss on its investment due to the fall in the BTC price, a report says.

AccessTimeIconJul 26, 2022 at 1:26 p.m. UTC
Updated May 11, 2023 at 6:03 p.m. UTC

Business intelligence firm MicroStrategy (MSTR) is faced with a tougher macroeconomic backdrop and has a premium valuation for a low-growth asset, Jefferies said in a research report Tuesday.

The broker downgraded the stock to underperform from hold with an unchanged price target of $180. MSTR shares fell 7% in pre-market trading.

MicroStrategy is a “tale of two cities” – bitcoin (BTC) and the core business intelligence (BI) business, Jefferies said. The company now holds 129,200 BTC, and the investment is generating losses due to the fall in the bitcoin price.

Bitcoin now makes up 52% of the company's enterprise value (EV) at $2.8 billion, which translates to a $1 billion unrealized loss on a $3.97 billion investment.

The downgrade is due to three main factors, the note said. It will be harder to execute large-scale BI deployments in the near term due to the tougher macro environment, execution surrounding the cloud transition has been “subpar” leading to a decline in billings growth and the stock trades at a premium relative to comparable companies.

For the second quarter, the broker forecasts total revenue growth of 4% (more than the analyst consensus of 3%), non-GAAP operating margins of 13.6%, compared with consensus at 15.5% and a total billings decline of 6% compared with expectations of 6% growth.

MicroStrategy has been a “visionary” on BTC and has established itself as a “thought leader” in the industry, the note said, adding that management has increased leverage on its balance sheet and issued new shares for more bitcoin investment. Management is expected to provide an update on the company’s intent to continue to invest in BTC, the note added.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Author placeholder image

Will Canny is CoinDesk's finance reporter.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.