One of the standouts of today's morning trading session has been MicroStrategy, which logged a -5.2% drop and underperformed the S&P 500 by -5.0%. The Software stock is now trading at $353.67 per share and is -32.28% below its average target price of $522.23. Analysts have set target prices ranging from $212.11 to 650.0 dollars per share, and have given the stock an average rating of buy.
We can use MicroStrategy's short interest as a proxy for determining general market sentiment regarding the stock. The short interest is the percentage of the share float that represents short positions, meaning that the investor believes the stock will decline in the future. Since MSTR's short interest is 10.3%, the market sentiment is mixed on this stock.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
We can make inferences about the market sentiment surrounding MicroStrategy by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 43.2%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
To sum up, MicroStrategy is probably the subject of mixed market sentiment because of an analyst consensus of strong upside potential, a buy rating, an above average percentage of its shares sold short, and only a small 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 $-2.48
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MicroStrategy has a trailing 12 month Price to Earnings (P/E) ratio of -142.6 compared to the S&P 500 average of 29.3
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The company has a Price to Book (P/B) ratio of 18.99 in contrast to the S&P 500's average ratio of 4.74
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MicroStrategy is a Technology company, and the sector average P/E and P/B ratios are 30.01 and 3.91 respectively
