Shares of MicroStrategy fell to $321.16 during today's morning trading session -- a decrease of -3.8% that still sees the stock 14.7% above its average analyst target price of $280.0. So there may be further downside for the Software stock, which analysts rate as hold on average. Current target prices range from $160.0 to 400.0 dollars per share.
With a short interest of 30.0%, we can infer that the market sentiment on MicroStrategy is negative. Each short position represents an investor's expectation and hope that the stock's price will reverse its present course and start falling.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on MicroStrategy is to look at the percentage of institutions that are invested in the stock. In this case, 59.3% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
To sum up, MicroStrategy is probably the subject of negative market sentiment because of an analyst belief that shares are overpriced, a hold rating, an unusually large proportion of its shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about MSTR:
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The stock has trailing 12 month earnings per share (EPS) of $-127.16
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MicroStrategy has a trailing 12 month Price to Earnings (P/E) ratio of -2.5 compared to the S&P 500 average of 15.97
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MicroStrategy is a Technology company, and the sector average P/E and P/B ratios are 27.16 and 6.23 respectively
