Palmer views MSTR with a $950 price target, implying 197% upside from Tuesday’s close.
The extent of its weaker-than-expected software business performance in Q1 “was not nearly enough to justify the extent of the recent decline in the stock price, in our view, especially relative to the price of bitcoin during that span,” Palmer wrote in a note to clients.
Moreover, total revenue slid 3% to $119.3M Y/Y in Q1 primarily driven by a “more challenging macroeconomic environment due to war in Ukraine” and “a tough comparison in Q1 2021,” CFO and President Phong Le said during the Q1 earnings call. But management said that some of the business that failed to materialize in Q1 could reverse trend at some point this year.
YTD, MSTR stock, which could be seen as a proxy to bitcoin (BTC-USD), is off nearly 39%, while the world’s largest cryptocurrency by market cap is down about 19%.
Note that SA’s Quant Rating in the beginning of April had screened MSTR at high risk of performing badly given negative EPS revisions. The Quant Rating views MSTR as a Sell, with the poorest factor grades in revisions and profitability.
Earlier this week, (May 3) MicroStrategy Q1 revealed bitcoin losses and elevated expenses.