MicroStrategy’s Q4 2024 earnings preview

When does MicroStrategy report earnings?

MicroStrategy is set to release its quarter four (Q4) financial results on 5 February 2025 (Wednesday), after the US market closes.

4Q 2024 expectations:

• Revenue: US$124.5 million (flat year-on-year)

• Net income: -US$20.5 million (US$102.5 profit in 4Q 2023)

• Earnings per share (EPS): -US$0.125 (US$0.56 in 4Q 2023)

With quarterly revenue of US$124.5 million, ongoing losses, and declining revenue growth over the past year, MicroStrategy’s US$93 billion market cap appears significantly detached from its core business fundamentals. A price-to-sales ratio approaching 200x seems to render traditional valuation metrics largely irrelevant.

Stock performance is primarily Bitcoin-driven

Market participants are primarily valuing the company based on its substantial Bitcoin holdings, which have grown significantly over the years. This increase, alongside the rise in Bitcoin's market value, has contributed to a 730% surge in MicroStrategy’s share price over the past year.

During the same period, the 20-day rolling correlation between the company’s share price and Bitcoin’s price has fluctuated between -0.28 and +0.94. This suggests that while Bitcoin’s price remains the primary driver, other factors such as macroeconomic conditions and corporate strategies—like issuing additional shares to fund Bitcoin purchases—also play a role in shaping the stock’s performance.

Capital raise roadmap laid out through 2027, further insights sought from upcoming earnings call

Most recently in early January this year, MicroStrategy announced that it is targeting a capital raise of up to US$2 billion, following through with its 21/21 plan which seeks to raise US$21 billion of equity and US$21 billion of fixed income instruments over the next three years (US$10 billion in 2025, US$14 billion in 2026, and US$18 billion in 2027). The main goal is clear, which primarily is to offer US$42 billion worth of firepower to further load up on its Bitcoin holdings, a strategy that has been well-supported by investors thus far.

Initial reaction to the early-January announcement has been positive, and Bitcoin prices hovering at its recent highs could play a key role in bolstering sentiments further. Given the company’s unique combination of providing traditional enterprise software and digital asset investments, market participants will be looking to hear how the company plans to balance these two very different aspects of its business at the upcoming earnings call.

Rhetorics from MicroStrategy’s founder, Michael J. Saylor, will likely continue to emphasise his commitment to buying and holding Bitcoin “indefinitely” and tying the company to outperform Bitcoin as a “intelligent leverage”. His capital-raising roadmap has been laid out through 2027, so investors will be looking for any additional insights on the company’s plans moving forward.

Analyst rating

There has been an increase in analysts’ coverage of MicroStrategy over the past year, with 78% of call ratings at “buy” and 22% at “Strong buy”. The current median price target stands at US$510.00, which will suggest a retest of its 21 November 2024 all-time high.

Technical analysis – Can we see a new higher low?

From a technical standpoint, sentiments around MicroStrategy’s share price has improved lately, with its share price recently forming a new higher low and higher high. A bullish crossover displayed on the daily moving average convergence/divergence (MACD) suggests that near-term momentum is shifting in favour of buyers.

That said, broader risk sentiments may be expected to take a hit into the new week, as China’s new artificial intelligence (AI) model, DeepSeek, seems to instil some concerns over US tech dominance and put companies’ lofty valuation back under scrutiny. While it remains to be seen if DeepSeek will prove to be a viable, cheaper alternative in the long term, investors may be adopting a “sell first, think later” mindset for now.

On the downside, one to watch for any formation of a higher low as a continuation of its near-term upward trend, possibly near a key upward trendline support around the US$330 level. Failure to hold the trendline support could call for a move to retest the US$275.00 level next.