Cantor Fitzgerald’s Brett Knoblauch had caught up on the sharp decline in the price of Strategy ( MSTR ) and lowered his 12-month price target for Strategy ( MSTR ) to $229 from $560, citing a weaker environment for raising capital tied to bitcoin .
The new target still suggests nearly 30% upside from the current price of $180, with Knoblauch maintaining his overweight rating.
Strategy has built its business model around raising money via common stock, preferred stock and convertible debt offerings and using the cash to buy more bitcoin. The flywheel worked wonderfully for years, driving MSTR to eye-popping returns since its first bitcoin purchase in 2020. Over the past year, however, investors have been less willing to value the Strategy at a high premium to its bitcoin stack. Combined with bitcoin’s poor price performance, it has sent MSTR lower by around 70% from its late 204 peak.
Cantor now calculates Strategy’s fully adjusted net assets to market (mNAV) at just 1.18x – still a premium, but down from previously much higher levels. This prevents Michael Saylor and team from raising money through what would now potentially be dilutive sales of common stock.
Knoblauch thus lowered his forecast for Strategy’s annual capital markets revenue to $7.8 billion from $22.5 billion. The value assigned to Strategy’s treasury operations — essentially, how much potential upside it can capture by raising capital and buying bitcoin — fell from $364 a share. stock at just $74.
Still, Knoblauch has not given up on the company. “This is a function of both falling bitcoin prices and lower multiples,” he wrote in his Friday note. While he sees the current market as a headwind, his overweight rating signals confidence that the strategy can work again if bitcoin prices recover and investors’ appetite for leveraged exposure returns.
That view was echoed in a separate note from Mizuho, which took a more optimistic view of Strategy’s short-term financial position. After raising equity capital of $1.44 billion, the company has built up a cash reserve large enough to cover 21 months of preferred stock dividends. Analysts Dan Dolev and Alexander Jenkins said this gives Strategy the flexibility to hold its position without having to sell bitcoin.
At a recent event hosted by Mizuho, CFO Andrew Kang outlined a cautious approach to future fundraising. He said the firm has no plans to refinance its convertible debt before the first maturity in 2028. Instead, it will rely on preferred equity, which will give it access to capital while preserving its bitcoin holdings.
Kang also made clear that the firm will only return to issuing new shares once its mNAV climbs above 1 — a signal that the market is once again valuing its bitcoin exposure at a premium. If that doesn’t happen and capital becomes more difficult to raise, bitcoin sales may be considered, though only as a last resort.
The company appears to be taking a page from its 2022 playbook, as it paused bitcoin purchases during a market downturn and resumed buying when conditions improved. Analysts say this strategy – staying patient and fluid – could help the strategy navigate the current crisis.
Read More: Strategy Still Premier Bitcoin Proxy, Benchmark Says, Rejects ‘Doom’ Narrative
