- Strategy (MSTR) shares hit an intraday high of $307.60 during Tuesday’s trading session, driven by the co.’s Bitcoin (BTC) stash of 528,185 BTC, which has boosted the stock over 2,500% in five years through aggressive buying funded by $18.6 billion of a $21 billion share issuance and $711 million from STRF stock.
- Analyst Gus Gala from Monness Crespi downgraded MSTR to ‘Sell’ with a $220 price target, suggesting a 29% drop, arguing that the company’s reliance on share issuance for bitcoin purchases is nearing its limit.
- Gala warns that without shifting more to fixed-income securities, Strategy’s bitcoin treasury strategy could weaken, as raising funds via equity, already heavily tapped at $18.6 billion, may become tougher, challenging its growth model.
Strategy (MSTR) shares climbed 4.42% to $301 in Tuesday’s trading session, peaking at an intraday high of $307.60, reflecting ongoing investor enthusiasm for the company’s bold Bitcoin (BTC) strategy. Holding an impressive 528,185 BTC, Strategy has transformed itself into a powerhouse among corporate cryptocurrency adopters, a move that has propelled its stock value up over 2,500% in the last five years. This aggressive accumulation, fueled largely by issuing common shares and preferred stock, showcases the company’s commitment to amassing Bitcoin as a core treasury asset. Just last week, Strategy raised more than $711 million through its STRF preferred stock series, adding to the $18.6 billion already tapped from its $21 billion at-the-market common share program, demonstrating a relentless pace in its funding efforts.
Yet, not everyone is convinced this trajectory will hold. Monness Crespi analyst Gus Gala downgraded MSTR to a ‘Sell’ rating, setting a $220 price target that implies nearly 29% downside from its current $307 level. Gala’s skepticism stems from the belief that Strategy’s heavy reliance on share issuance – having already utilized $18.6 billion of its $21 billion capacity – may soon hit a wall. He suggests that the company’s ability to keep raising funds this way is nearing its limit, particularly after a shift away from convertible debt following his ‘Neutral’ coverage initiation two weeks ago. Gala argues that unless Strategy pivots more toward fixed-income securities, its Bitcoin treasury approach could fall, as the market may grow wary of continuous equity dilution. With 528,185 BTC on its balance sheet, the company’s strategy hinges on maintaining access to capital, a dynamic that could either cement its dominance or expose it to new risks as funding avenues evolve.
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