Analysts led by Lance Vitanza lowered their price target for Strategy to $260 from $400 to reflect Bitcoin’s “observed ongoing weakness,” according to a note. The investment bank now foresees the digital asset hitting $100,000 by year’s end, as opposed to $140,000 previously.
In fact, they described Strategy’s Digital Credit Capital Framework as “a positive for credit visibility and capital flexibility,” given it outlines how the company intends to manage its cash reserves, flagship preferred stock, and stockpile of 847,363 Bitcoin moving forward.
“This tactical move should go a long way toward restoring confidence in the company’s ability to weather a protracted Bitcoin downturn,” the analysts argued, referencing concerns around the durability of dividends that Strategy routinely pays on products like STRC.
By linking STRC’s dividend adjustments more explicitly to the management of Strategy’s cash reserves and future Bitcoin liquidations, the firm took “a modestly positive step toward improving price stability and investor confidence in the preferred stock,” the analysts wrote.
What’s more, Strategy’s framework marked a shift toward “two-way capital allocation,” the analysts wrote, noting that the company’s ability to repurchase $1 billion in common shares and $1 billion in preferred shares may present arbitrage opportunities.
The analysts highlighted Strategy’s new monetization program for Bitcoin, under which the firm can sell $1.25 billion worth of Bitcoin to top off its cash reserves. The initiative formalized the digital asset as a “flexible source of capital” alongside other levers, they added.
Last July, TD Cowen raised its Strategy price target to $680, around the time shares were trading above $450. MSTR shares are now down more than 79% in the last year.
