Analysts at TD Cowen on Wednesday lowered their price target for Strategy stock, citing the Bitcoin leader’s stock price volatility and increasing shareholder dilution as key factors.
The investment bank now expects Strategy stock to reach $500 per share next year, compared to its previous forecast of $535, according to a note shared with . decryption. Strategy’s stock recently traded around $188 per share. Yahoo Financedecreased by about 24% compared to last month.
Strategy for the beginning of the week signaled The company announced it had raised $1.44 billion to maintain its cash reserves. The company indicated that the funds would be used for preferred stock dividends, a traditional source of funding. grow under constraintsHe said he built this reserve as a way to avoid the potential fate of selling his Bitcoin holdings, but would do so if necessary.
Historically, Strategy has issued common stock to increase its $60 billion Bitcoin inventory. However, this year the company issued $7.7 billion worth of preferred stock, which has become less effective as a means to increase its Bitcoin holdings per share.
“In our view, we believe that strengthening liquidity in times of stress is always prudent and makes everyone in the strategy substantially better off,” they wrote. “This strategy has gone a long way in resolving deep-rooted questions about continued access to capital markets.”
Analysts said the adjusted model for Strategy shares reflects the dilutive impact of raising cash to fund dividends on preferred stock while the company’s stock price is hovering around 13-month lows.
The drop in Strategy’s share price has led to more dilution than investment banks had previously anticipated. Along these lines, analysts said the strategy’s increased volatility will result in lower earnings multiples, with multiples dropping from 9x to 5x.
While the $500 per share estimate may seem “out of context” given recent changes in sentiment, analysts said it is reasonable given that the company incorporates leverage and the strategy’s Bitcoin premium can change quickly with the price of the digital asset.
TD Cowen’s latest forecast for Strategy stocks was announced at a time when some companies are becoming increasingly bullish. Earlier this week, Investment Bank Benchmark raised For example, the 2026 price target is $705.
Benchmark analyst Mark Palmer argued in a note that strategic stocks remain “one of the most powerful asymmetric instruments in global markets” due to their unparalleled ability to raise capital and benefit from Bitcoin’s upside potential.
Strategy stock has fallen about 35% since the beginning of the year. During the same period, the price of Bitcoin fell by 2.5% to just over $92,000, according to the crypto data provider. CoinGecko.
