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TD Cowen slashed its price target by 35% for shares of Strategy (MSTR) on Tuesday, recalibrating expectations as Bitcoin continues struggling to build momentum.
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.
The leading digital asset by market cap fell back below $60,000 on Tuesday, according to CoinGecko. At $58,400, its price had tumbled more than 20% over the past month. Bitcoin has now fallen more than 53% from an all-time high mark above $126,000 set last October.
Shares of Strategy fell 8.6% to $84.75 on Tuesday, shedding gains after snapping a nine-day losing streak the day before, according to Yahoo Finance. Since Strategy sold Bitcoin roughly a month ago, for the first time since 2022, the firm’s stock has tumbled nearly 41% from $142.69.
Although the update comes on the heels of a capital management framework unveiled by the Bitcoin-buying firm this week, the analysts emphasized that their expectations were renewed independently of the company’s sweeping announcement on Monday.
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.
Alongside the framework’s adoption on Monday, Strategy signaled that its cash reserves had expanded to $2.55 billion. In recent weeks, the company’s so-called USD Reserve has come into focus as analysts have pointed to ballooning costs associated with Stretch (STRC).
Strategy Could Sell Up to $1.25B of Bitcoin Under ‘Digital Credit Capital Framework’
“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.
On Monday, the preferred stock’s dividend rate was hiked for an eighth time to 12%, increasing Strategy’s recurring costs. On Tuesday, STRC fell 0.7% to $83.11, lingering below its $100 par value after falling to a record low of $71.25 last week.
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.
