TLDR
- Strategy purchased 4,000 Bitcoin worth $450 million, bringing total holdings to 636,500 Bitcoin valued at $70.6 billion
- The company relaxed its self-imposed 2.5x premium restriction on issuing common stock when deemed advantageous
- Top analysts from TD Cowen and Benchmark maintain Buy ratings despite stock declining 7% over past month
- Strategy now qualifies for S&P 500 inclusion with decision expected this week
- Wall Street consensus shows Strong Buy rating with average price target of $549.43, indicating 61% upside potential
Strategy recently expanded its Bitcoin treasury with a $450 million purchase of 4,000 Bitcoin. The Tysons Corner, Virginia-based company now holds approximately 636,500 Bitcoin worth $70.6 billion.
The latest acquisition was funded primarily through equity offerings. Strategy raised $425 million from common stock sales and $46.5 million from preferred shares.
The purchase comes as Strategy’s stock has faced recent pressure. Shares have declined roughly 7% over the past month, trading around $346 on Monday.
This marks a retreat from November highs when the stock reached $543 following the U.S. presidential election. The company remains up 18% year-to-date despite the recent pullback.
Strategy made headlines by modifying a key operational constraint. The company previously avoided diluting common shareholders when its stock traded below a 2.5x premium to its Bitcoin holdings.
Under the revision, Strategy can now issue common shares “when otherwise deemed advantageous.” This change has sparked debate among retail investors about the company’s direction.
Analyst Support Remains Strong
Top Wall Street analysts continue backing Strategy despite the stock’s recent struggles. TD Cowen analyst Lance Vitanza maintains a Buy rating while acknowledging the summer weakness.
Vitanza expects better performance ahead based on his longer-term outlook. He noted increased activity recently, with Strategy purchasing an additional 430 bitcoins for $51.4 million.
The analyst highlighted that acquisitions were funded mainly through three of Strategy’s four preferred stock offerings. The new STRC offering continues performing well in secondary markets.
Benchmark analyst Mark Palmer also reaffirmed his Buy rating with a $705 price target. This represents potential upside of over 100% from current levels.
Palmer defended Strategy’s decision to relax its common equity restrictions. He called it a “rational course-correction that restored flexibility” consistent with past practices.
S&P 500 Inclusion on Horizon
Strategy now meets all requirements for S&P 500 inclusion. A decision is expected this week, which could represent a major milestone for digital asset integration into mainstream equity markets.
Crypto-focused companies like Coinbase have already joined the index. However, the S&P Index Committee might view Strategy differently given its income derives almost entirely from Bitcoin price movements.
Inclusion would drive billions in passive investment demand for Strategy shares. This could provide support for the stock price going forward.
The company’s multiple-to-net asset value (mNAV) currently stands at 1.5x. Within the past year, Strategy has traded as high as a 3.9x premium to its Bitcoin holdings.
Benchmark analysts suggested Strategy’s initial restriction may have become counterproductive. The constraint potentially limited access to cheap capital during opportune moments.
The recent modification reflects Strategy’s “iterative and opportunistic” approach to Bitcoin accumulation since 2020. Analysts view this as returning to normal operations rather than a fundamental strategy shift.
Wall Street maintains a Strong Buy consensus on Strategy stock. The rating is based on 12 Buy recommendations, one Hold, and one Sell.
The average price target of $549.43 suggests approximately 61% upside from current trading levels. Strategy continues adding Bitcoin to its treasury while analysts expect additional issuance heading into fall.
