S&P 500 slips on report Fed’s Waller leading race to replace Powell; tech shines
On Tuesday, TD Cowen reaffirmed its positive stance on Strategy, Inc. (NASDAQ:MSTR), maintaining a Buy rating and a price target of $590.00. This target represents significant upside potential from the current price of $368.45, though InvestingPro analysis suggests the stock is trading above its Fair Value. With analyst targets ranging from $175 to $650, investors should note that the stock has shown remarkable volatility, delivering a 119% return over the past year. The firm’s analyst highlighted Strategy’s recent acquisition of 4,020 bitcoins, which cost the company $427 million. This purchase was primarily funded through the company’s common stock at-the-market (ATM) offering. More significant, according to the analyst, is the creation of a novel STRF preferred stock ATM valued at $2.1 billion. This move is expected to be more beneficial to common shareholders compared to previous common stock and STRK ATM offerings.
Strategy has been identified as an attractive option for investors interested in bitcoin exposure. The introduction of the STRF preferred stock ATM is anticipated to result in higher accretion for common shareholders. InvestingPro data reveals the company’s aggressive growth strategy has yielded strong returns, with impressive performance over the last three months, five years, and decade. Investors seeking deeper insights can access 12 additional ProTips and comprehensive financial metrics through InvestingPro’s detailed research reports. The analyst’s note also revisited the concept of BTC Torque, a metric designed to assess the financial leverage of securities issued by public bitcoin treasury companies (PBTCs) like Strategy. BTC Torque measures the bitcoin value generated over a certain period against the capital invested, taking into account the assumed annual return rate of bitcoin and the terms of the security or loan.
The analysis was updated to account for dilution from common share issuance used to fund preferred dividend payments and to include issuance fees under the existing STRK ATM. With this in mind, the firm calculates a torque of 8.0x over a 10-year horizon. This suggests that every $100 million of common stock issued to buy bitcoin now could potentially generate $800 million of value for common shareholders in a decade. Strategy’s aggressive strategy in bitcoin investment continues to be a central part of its business model, with the company leveraging financial instruments to maximize shareholder value through cryptocurrency assets. While operating with a moderate debt level, InvestingPro data shows the company maintains a healthy gross profit margin of 71%, despite current profitability challenges. For comprehensive analysis of Strategy’s financial health and future prospects, investors can access the full Pro Research Report, part of InvestingPro’s coverage of over 1,400 US equities.
In other recent news, Strategy has made significant financial moves by acquiring a substantial amount of Bitcoin and engaging in stock sales. The company announced the purchase of 4,020 Bitcoin for $427.1 million, funded through sales of at-the-market preferred stock. This acquisition brings Strategy’s total Bitcoin holdings to approximately 580,250, acquired for about $40.6 billion, with a current valuation of over $63.5 billion. Additionally, Strategy disclosed plans to sell up to $2.1 billion of its 10.00% Series A Perpetual Strife Preferred Stock, intending to use the proceeds for general corporate purposes and further Bitcoin acquisitions.
In another development, MicroStrategy, also known as Strategy, reported selling 1,712,708 Class A common stock shares, resulting in net proceeds of $705.7 million. The company used these funds to acquire 7,390 bitcoins at an average price of $103,498 per bitcoin. Furthermore, Strategy announced a class action lawsuit filed against the company, alleging false or misleading statements regarding its Bitcoin investment strategy. Meanwhile, BTIG analyst Andrew Harte raised the price target for Strategy to $620, maintaining a Buy rating, citing the company’s commitment to its Bitcoin strategy. The analyst noted that the value of Strategy’s Bitcoin holdings has increased, contrasting with the S&P 500’s performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.