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On Tuesday, TD Cowen reaffirmed its Buy rating on MicroStrategy (NASDAQ:MSTR) shares, maintaining a price target of $550.00. Currently trading at $289, the stock has drawn significant attention from analysts, with targets ranging from $225 to $650. According to InvestingPro data, the stock appears overvalued at current levels. The firm’s analyst, Lance Vitanza, expressed optimism regarding MicroStrategy’s recent financial maneuver involving a new fixed income instrument. Vitanza highlighted the instrument’s capacity to accelerate Bitcoin purchases, which would traditionally be spread out over several years, funded by MicroStrategy’s common stock at-the-market (ATM) offerings. InvestingPro analysis reveals the company’s current ratio of 0.71, indicating potential challenges in meeting short-term obligations.
According to Vitanza, the issuance of non-convertible preferred shares is a strategic move that allows MicroStrategy to advance its Bitcoin acquisition strategy. This is particularly appealing to investors who are bullish on Bitcoin and see MicroStrategy as an attractive investment. The analyst anticipates that the company will finance dividends on the new preferred shares mainly through the issuance of common equity under its ATM program, which could be extended or supplemented in the future.
The transaction is seen as a way to front-load Bitcoin purchases that would otherwise be made quarterly over multiple years. Vitanza pointed out that if Bitcoin’s value increases at a rate higher than the implied current yield of the preferred shares upon issuance, which is approximately 11.765%, the move will be beneficial to MicroStrategy’s common shareholders.
TD Cowen’s analysis suggests that the transaction has the potential to be accretive to shareholders, provided that Bitcoin appreciates as anticipated. The firm advises against investing in MicroStrategy’s common shares for those who do not share this positive outlook on Bitcoin’s future price trajectory. Vitanza’s comments underscore the firm’s expectation that most MicroStrategy common shareholders are optimistic about the cryptocurrency’s appreciation, aligning with the company’s aggressive investment strategy in Bitcoin. The stock has shown remarkable volatility, with a 77% gain over the past six months despite recent challenges. For deeper insights into MicroStrategy’s financial health and growth prospects, including 10+ additional ProTips and comprehensive valuation metrics, check out the full research report on InvestingPro.
In other recent news, Strategy Inc. has made significant financial moves, including the acquisition of 22,048 Bitcoins at a cost of approximately $1.92 billion. This purchase brings the company’s total Bitcoin holdings to 528,185 units, acquired at an average price of $67,458 per Bitcoin. The company funded these acquisitions through proceeds from its Common ATM and STRK ATM programs, which have also seen substantial activity. From March 24 to March 30, 2025, Strategy sold 3,645,528 MSTR shares and 213,807 STRK shares, generating net proceeds of $1.20 billion and $18.52 million, respectively.
Additionally, Strategy has introduced a new class of capital stock, the 10.00% Series A Perpetual Strife Preferred Stock, issuing 8.5 million shares as part of a public offering. Monness Crespi Hardt recently downgraded Strategy’s stock from Neutral to Sell, citing concerns over the company’s reliance on convertible debt for funding Bitcoin acquisitions. Conversely, Bernstein SocGen Group maintained an Outperform rating on Strategy, with a price target of $600, highlighting the company’s strategic capital structure and expanded Bitcoin holdings. These developments reflect Strategy’s ongoing efforts to adapt its financial strategies and maintain its position in the evolving digital asset market.
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