MicroStrategy-Linked ETFs Surge 400% This Year: The Michael Saylor Effect

Analysts are investigating the influence of Michael Saylor, the co-founder of MicroStrategy Inc. (MSTR), on exchange-traded funds (ETFs) that are associated with the company's performance. This scrutiny comes as MicroStrategy's stock has seen a substantial increase, fueled by its significant ownership of Bitcoin (BTC/USD).

Recent Developments: The stock price of MicroStrategy has risen dramatically, increasing by 416.19% in the year to date, which in turn has positively affected the performance of various linked ETFs.

For instance, the Bitwise Crypto Industry Innovators ETF (BITQ), which holds 18.35% of MicroStrategy shares, has soared by 68.58% this year. Similarly, the Schwab Crypto Thematic ETF (STCE), with a 14.4% exposure to MicroStrategy, has seen a rise of 55.07%.

Even more remarkably, the T-Rex 2x Long MSTR Daily Target (MSTU) has gained an impressive 453.76%, while the Defiance Daily Target 2x Long MSTR ETF (MSTX) has increased by 309.09%, according to recent reports.

Both T-Rex and Defiance ETFs have implemented hedging strategies with inverse ETFs. However, the T-Rex 2x Inverse MSTR Daily Target (MSTZ) has a modest asset base of just $155 million.

Expert Opinions: Matthew Tuttle, the manager of the T-Rex ETF, has described this market behavior as “The Michael Saylor effect”, drawing parallels with the notable impacts seen from leaders in the tech industry like Elon Musk and Jensen Huang. Tuttle cautions, though, that from a fundamental standpoint, the valuation of MicroStrategy may seem overly high.

Market Reactions: On a recent Monday, MicroStrategy's shares jumped 5.93% during pre-market trading before settling to close lower for the day. Over the weekend, Saylor disclosed that the company is generating around $500 million daily as Bitcoin nears the $100,000 mark.

Market data from Benzinga Pro indicates that MicroStrategy currently has a consensus price target of $449.50 based on evaluations from 12 analysts. The highest target set is $690 by BTIG on December 11, 2023, while Jefferies has the lowest target at $140 from November 10, 2022. The average of $563.33 estimated by TD Cowen, Barclays, and Benchmark suggests a promising upside of approximately 41.90% for MicroStrategy.

Further Reading:

• Michael Saylor Reveals MicroStrategy Is ‘Making $500M A Day’ With Bitcoin: ‘May Very Well Be The Most Profitable Company In The US Growing The Fastest Right Now’

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MicroStrategy, ETFs, Bitcoin