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Analysts are closely examining the impact of Michael Saylor, co-founder of MicroStrategy Inc. (NASDAQ:MSTR), on exchange-traded funds (ETFs) that are linked to the company’s performance. This comes amid a significant surge in MicroStrategy’s stock, driven by its substantial Bitcoin (CRYPTO: BTC) holdings.
What Happened: The volatility of MicroStrategy has led to significant returns for ETFs tied to its performance. The stock has surged 416.19% year-to-date, impacting various ETFs.
The Bitwise Crypto Industry Innovators ETF (NYSE:BITQ) with 18.35% MSTR holding saw a rise of 68.58% so far this year, while the Schwab Crypto Thematic ETF (NYSE:STCE), which gives 14.4% exposure to MSTR, increased by 55.07%.
The T-Rex 2x Long MSTR Daily Target (BATS:MSTU) experienced a remarkable 453.76% gain, and the Defiance Daily Target 2x Long MSTR ETF (NASDAQ:MSTX) rose by 309.09%, Barron’s reported on Wednesday.
Both T-Rex and Defiance have hedged with inverse ETFs, but the T-Rex 2x Inverse MSTR Daily Target (MSTZ) holds only $155 million in assets.
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Matthew Tuttle, manager of the T-Rex ETF, attributes this phenomenon to “The Michael Saylor effect,” likening it to the influence of other high-profile CEOs like Elon Musk and Jensen Huang, reported Barron’s. Tuttle acknowledges the risk, noting that from a fundamental perspective, MicroStrategy’s valuation appears inflated.
Why It Matters: On Monday, MicroStrategy shares climbed 5.93% in pre-market trading before closing the session in the red. Over the weekend, Saylor revealed that the company is generating $500 million daily as Bitcoin edges closer to the $100,000 milestone.
According to Benzinga Pro data, MicroStrategy has a consensus price target of $449.5 based on the ratings of 12 analysts. The high is $690 issued by BTIG on Dec. 11, 2023. The low is $140 issued by Jefferies on Nov. 10, 2022.
The average price target of $563.33 between TD Cowen, Barclays, and Benchmark implies a 41.90% upside for MicroStrategy.
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