For many years, Microstrategy (MSTR 4.20%) was a sleepy tech stock. Between 2010 and 2020, the data mining and analytics software provider only grew its annual revenue at an average annual rate of 0.6% and struggled to compete against more agile, cloud-based competitors like… Salesforce.

But in 2020, MicroStrategy’s co-founder and then-CEO Michael Saylor directed to invest $250 million in the company Bitcoin (BTC 0.52%). The company continued to purchase Bitcoins over the following years, reaching a total holding of 279,420 Bitcoins in November of this year.

Image source: Getty Images.

In total, MicroStrategy has committed approximately $11.9 billion to these Bitcoins, which are worth $28.3 billion at the time of this writing. This sum represents over 30% of MicroStrategy’s current market capitalization. This also makes the company the world’s largest single corporate owner of Bitcoin.

Over the past five years, MicroStrategy’s stock price rose 2,590% as the rising value of its Bitcoin investments offset weak growth in its software business. This rally would have turned a $40,000 investment into more than $1 million. But could MicroStrategy stock make even bigger gains by 2050?

A bet on Bitcoin

MicroStrategy is trying to revitalize its software business by replacing its on-premises desktop applications with cloud-based subscription services. In addition, new generative AI tools for processing large amounts of data have been introduced.

However, total sales still fell 1% in 2023, and analysts expect total sales to grow at a compound annual rate of less than 1% from 2023 to 2026. In other words, the software side of the business is expected to remain sluggish for the foreseeable future – but that mainly serves as a source of fresh cash that it can spend on more Bitcoin.

The company has also taken on a lot of debt, issued more shares, and incurred large impairment charges related to its Bitcoin purchases. The company ended its most recent quarter with $4.2 billion in long-term debt – up from $2.1 billion at the end of 2021 – and has increased the number of shares outstanding by 122% over the past five years. Analysts expect impairment charges from its Bitcoin purchases to make MicroStrategy unprofitable on a generally accepted accounting principles (GAAP) basis by 2026.

How High Could MicroStrategy Stock Go?

Bitcoin bulls believe MicroStrategy’s all-in bet on the cryptocurrency will pay off as the cryptocurrency’s value skyrockets over the next few decades. Saylor has predicted that Bitcoin’s price could rise from about $100,000 today to $13 million in the next 21 years as it gains more traction among institutional investors and financial institutions, while the investment management firm’s most optimistic analyst forecast Company VanEck is that the price could rise just as much, reaching $52 million by 2050. VanEck has the following to offer: VanEck Bitcoin ETFone of the many funds that invest exclusively in this asset.

Bitcoin’s planned four-year halvings – which halve crypto mining rewards – could also support these gains by accelerating the speed at which new supply comes to market.

From here, Bitcoin’s price would need to increase by 12,900% to reach $13 million and 51,900% to reach $52 million. If MicroStrategy stock follows the same trajectory, a $10,000 investment made today could turn into $1.3 million or $5.2 million over that period. Therefore, MicroStrategy stock could make multi-million dollar gains over the long term if the price of Bitcoin rises – but the stock could also quickly collapse under the weight of its own impairment losses, debt, and dilution if the price of Bitcoin falls.

Is MicroStrategy a better investment than Bitcoin?

MicroStrategy shares could outperform Bitcoin by 2050. Still, it is also riskier than owning Bitcoin directly or a Bitcoin exchange traded fund (ETF), as the company is constantly issuing new shares and taking on more debt to finance its crypto purchases. While MicroStrategy could be a potential millionaire stock, I don’t think it’s a better buy than Bitcoin or a spot Bitcoin ETF.