How To Buy Microstrategy Stock: An Investment Guide

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MicroStrategy is a US share listed on the US Tech 100 so when investing in it from the UK, an FX fee will be required.

What to consider before buying MicroStrategy shares

Buying MicroStrategy shares comes with financial risk and there’s always the potential that you could lose your initial deposit. To help minimise these risks, it’s important to have an investment plan in place. Here are some things to consider:

Know your long-term goals

Defining your investment goals can help determine key decisions such as the amount of capital you’re looking to allocate to each investment as well as your intended holding period before potentially selling for profit.

Financial markets can be unpredictable and investing in shares carries risk. Before placing a position, it’s important to evaluate whether you’re able to absorb any losses that may occur. Despite volatility, Bitcoin’s price has an upward trend. It’s therefore recommended that MicroStrategy stock is held for an extended time period so you can benefit from this upward trend and keep losses during bear markets minimal.

Know when you’ll need the money

Investing in MicroStrategy stock enables your capital to grow with the market value of the shares. This usually offers higher returns than cash savings which are tied to interest rates.

For maximum returns, shares are usually held for at least a decade. If you need the money before then, shorter term options like trading, bonds or savings accounts may be more suitable.

For short to mid-term financial goals, investing can still be a good option, but it’s recommended you opt for mature, lower risk assets like Apple or Amazon.

MicroStrategy is considered by most to be a high-risk investment. Its share price is correlated to Bitcoin’s volatile price movements. This exposed you to significant gains during crypto bull markets but notable losses during bear markets.

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Consider how much risk you can take

Before buying MicroStrategy stock, it’s important to develop an effective risk management strategy to help minimise potential losses if the market turns against you.

This could include:

• Diversifying your portfolio to include both high and low risk assets
• Holding MicroStrategy shares for at least a decade with the view of gradually building wealth
• Closely monitor the markets and other factors that may influence MicroStrategy’s share price

How to research MicroStrategy stock as an investment

Fundamental analysis is a key method of evaluating MicroStrategy’s stock performance. This approach examines the financial health of a company whilst also assessing broader market conditions that may influence MicroStrategy’s share price. Before investing in MicroStrategy, here are some things to analyse.

Net sales growth

Net sales represent the total gross sales after any discounts, allowances or returns have been deducted. MicroStrategy reports on its net sales quarterly, so it’s easy to compare and calculate its growth compared to the previous year.

Business model

A business model outlines how a company generates revenue. This encompasses the anticipated costs, target markets, products and services. A successful business continues to adapt its business model as the company grows and consumer demand changes, whilst maintaining competitive pricing and a sustainable cost.

MicroStrategy follows a dual-pillar business model. One pillar is that of a traditional software company generating income through cloud-based subscriptions and software licenses. The other pillar is its Bitcoin investment strategy where it continues to buy and hold large amounts of Bitcoin as a primary treasury asset.

Operating Profit

Operating profit is a key indicator of a company’s financial health as it measures earnings which come exclusively from business operations. MicroStrategy report on this quarterly, which enables you to consistently monitor its performance against profit objectives.

Why buy MicroStrategy shares

Investing in MicroStrategy provides you with exposure to both the growth of its software company as well as Bitcoin’s potential upside.

The company is considered an industry leader in business intelligence analytics, with a stable revenue coming from its cloud and licensing operations. Demand for these services is expected to increase over the next few years, which could positively impact profit margins.

What truly sets MicroStrategy apart from its competitors, however, is its exposure to Bitcoin. In 2020, CEO Michael Saylor made the decision to diversify away from the US dollar by placing some of its cash in Bitcoin as a way of protecting itself from global macroeconomic trends. Since then, the company has become the largest corporate Bitcoin treasury in the world and its share price is now closely correlated with the price of Bitcoin.

This structure offers significant advantages over directly owning crypto currency. Buying MicroStrategy shares enables you to gain exposure to Bitcoin without having to manage crypto wallets, private keys or security protocols. What’s more, these shares can be held in traditional savings accounts like stocks and shares ISAs, providing tax-efficient access to Bitcoin’s possible growth.

Although its share price is volatile, as MicroStrategy is a stock it’s more regulated than Bitcoin and is therefore considered lower risk. This can make it an appealing option if you’re looking to participate in the crypto market whilst maintaining the safety measures that come with investing in shares.

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What to do after you buy MicroStrategy shares

Once you’ve invested in MicroStrategy shares you can manage your position on our online platform, or via the IG Invest app. It’s important to make informed decisions by keeping an eye on recent market news and stock performance to help minimise losses.