MicroStrategy Expected to Flip to Profit in 2025: Bloomberg

MicroStrategy’s substantial Bitcoin holdings may soon drive it into profitability due to anticipated changes in crypto asset accounting rules.

According to a recent Bloomberg report, analysts project that new standards, allowing firms to mark digital assets to market value, could result in MicroStrategy flipping from negative to positive earnings by 2025.

MicroStrategy to Benefit from Bitcoin Value

The report suggested that the company’s substantial Bitcoin reserve, acquired under Chairman Michael Saylor’s strategy to hedge against inflation, could be a key contributor if revalued at current market prices.

Since the collapse of crypto markets two year ago, MicroStrategy has outperformed almost every major US stock, including AI bellwether Nvidia https://t.co/jf508QiBJC

— Bloomberg Crypto (@crypto) October 30, 2024

Analysts expected that updating Bitcoin’s valuation on MicroStrategy’s balance sheet could add billions to its reported income.

Lance Vitanza, managing director of equity research at TD Cowen, noted that MicroStrategy’s stock performance may stabilize after its recent surge.

“I think that the stock is going to stop skyrocketing,” said Vitanza, who has assigned a “buy” rating and anticipates the stock price will settle between $200 and $215.

Possible Overnight Flip to Positive Earnings

Analyst estimates predict MicroStrategy could achieve a net income of $2 billion next year, marking a substantial change from the projected $200 million loss for this year, according to Bloomberg data.

Mark Palmer, managing director at Benchmark Co., echoed a positive outlook for the company’s financial trajectory.

“The company will be in a position pretty much overnight to flip from negative earnings to positive earnings,” Palmer said. “Not only will the optics be better, but the company could be part of various indexes that take into account positive income.”

Bitcoin’s recent rise to $71,995, a 7.9% weekly gain and a fresh all-time high against the euro, highlights the favorable market conditions for MicroStrategy’s Bitcoin-heavy portfolio, according to CoinMarketCap.

This shift toward profitability could potentially make MicroStrategy eligible for inclusion in more investment indexes, further expanding its investment reach and appeal.

With over $18 billion in Bitcoin, MicroStrategy ranks among the largest corporate investors in the cryptocurrency space.