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February 14, 2024

The Compression Multiple Theory: MSTR's Potential Surge and Implications Across Sectors

Thando Dlamini
Written byThando DlaminiWriter
Researched byNikos PapadopoulosResearcher

In a recent tweet, a member of the crypto community unveiled a groundbreaking theory concerning the stock float compression of MicroStrategy (MSTR). The individual elaborated on what they termed the "compression multiple theory," drawing parallels between the trading dynamics of GameStop (GME) during the 2021 short squeeze and the current situation with MSTR.

The Compression Multiple Theory: MSTR's Potential Surge and Implications Across Sectors

According to the theory, MSTR's stock float compression, driven by a combination of forced buy-side volume and resilient retail investors, mirrors the pattern observed in GME during its unprecedented surge. The tweet predicts that MSTR, currently trading at approximately 1.2 times its net assets, could potentially see a surge in value akin to GME's multiple of net assets, which reached 49 times during the short squeeze.

The anticipation is for MSTR to trade near the net assets witnessed in 2021, around four times, driven by factors such as increasing retail interest in Bitcoin and bullish sentiment. The theorist attributes this compression phenomenon to the proportion of passive investors in MSTR and changes in allocations to related indexes.

Samson Mow's Bullish Outlook

Responding to the tweet, prominent crypto entrepreneur Samson Mow expressed his bullish outlook on MSTR, indicating the sentiment shared by many within the crypto community. MicroStrategy's significant holdings of 190,000 BTC and $3.5 billion in unrealized gains further bolster the optimism surrounding the company's prospects.

Implications Across Various Sectors

The implications of this theory extend beyond the realm of finance, with the theorist warning of potential disruptions across various sectors, including government, real estate, banking, and AI.

As MSTR continues to attract attention within the crypto community, the stage is set for a potential market upheaval, with Bitcoin advocate Samson Mow among those bullish on its prospects.

About the author
Thando Dlamini
Thando Dlamini
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Thando Dlamini, a vivacious 22-year-old from South Africa, seamlessly blends her love for the vibrant world of online casinos with her meticulous localization skills, making the digital gaming experience truly South African.

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