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As more investors seem to be seeking exposure to the crypto asset class (particularly after Trump’s election win), stocks are one way to get involved.
Let’s check in on that ecosystem.
Starting with MicroStrategy, Benchmark’s Mark Palmer on Nov. 18 raised his price target for MSTR shares from $300 to $450. He’s revising that again, according to a Monday note — this time to $650.
This comes after MicroStrategy last week completed a $3 billion offering of convertible senior notes. It then revealed in a Monday filing that it bought 55,500 BTC from Nov. 18 to Nov. 24 for $5.4 billion in cash (averaging $97,862 each).
MSTR shares hovered around $402 at 2 pm ET Monday — down 4.7% on the day but up 70% from a month ago.
The strength of the MSTR rally has some questioning the idea that these shares should trade at a nearly 3x premium to the market value of the company’s BTC pile.
But MicroStrategy, via treasury operations, has generated ~79,130 bitcoins YTD, translating into a 41.8% BTC yield (the % change of the ratio between MSTR’s bitcoin holdings and its fully diluted share count), Palmer explained. That BTC is currently worth roughly $7.5 billion.
“We regard the dollar values of the bitcoins that MSTR creates, calculated by using its BTC yield, as analogous to earnings, and we believe they can be projected and contextualized through the attachment of a valuation multiple,” he said.
On to Coinbase, Oppenheimer analysts on Monday raised their COIN price target from $265 to $358. The stock was trading around $311 at 2 pm ET Monday.
They mention that the “chilling effect” created by SEC lawsuits against “widely perceived good actors” in the segment, like Coinbase, “can’t be understated.”
“It had deterred new capital going into this space, and many developers had pivoted to other industries,” they added. “But the industry has a chance to rebuild the reputation, and Coinbase is leading this new chapter.”
In addition to the expectation of a yet-to-be-named new SEC chair embracing crypto as a catalyst, Coinbase’s trading volumes have increased substantially since the US election.
Average daily volumes have risen to $6.5 billion since Election Day — higher than the $2.4 billion YTD average prior to Nov. 5. Oppenheimer is projecting Q4 spot trading volume to be $350 billion (would be up 89% quarter over quarter and 127% year over year) and for “high trading volume to sustain under Trump’s crypto policy.”
As for other crypto stocks, Compass Point analyst Joe Flynn increased Galaxy’s price target from $22 (CAD) to $33 (~$24 CAD on Monday afternoon).
Beyond higher crypto prices and trading volumes momentum, GLXY is set to benefit from its expected uplisting to the Nasdaq and its term sheet with a hyperscaler to host high-performance computing (HPC) at its Helios campus — a datacenter Flynn called an “underappreciated asset.”
Flynn, also last week, lowered its rating of bitcoin miner Marathon Digital’s stock to neutral. He noted that “while MARA is an outsized beneficiary of higher BTC prices due to its HODL strategy, we don’t see much additional upside from the base business itself.”
Then there’s competing miner Core Scientific (CORZ), which notably offers HPC hosting to cloud provider CoreWeave. Flynn wrote earlier this month that CORZ is “well positioned to continue expanding their existing lead in delivering application specific HPC/GPU datacenters with a single tenant focus.”
CORZ is the top holding in the Amplify Transformational Data Sharing ETF (BLOK) — the largest blockchain-focused equity ETF. Other stocks in the top five are COIN, MSTR, Hut 8 Mining and GLXY.
Dan Weiskopf, who co-manages BLOK’s portfolio, said it’s hard to value blockchain-fueled disruption over the next decade as regulations become more crypto-friendly.
He told me: “The real excitement should be around the adoption of tokenization as the application and how blockchain as the technology will soon transform industries across the board.”
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