Monness, Crespi, Hardt & Co. Warns Michael Saylor’s Bitcoin Strategy May Be Reaching Its Limit
Michael Saylor’s Strategy (MSTR) has enjoyed a remarkable 2,500% surge in its share price over the past five years thanks to its aggressive Bitcoin purchases. However, analysts at Monness, Crespi, Hardt & Co. suggest that the company’s capital-raising strategy may be nearing its end.
In a recent downgrade, analyst Gus Gala expressed growing concerns that the company’s perpetual Bitcoin acquisition model could soon hit a wall. Gala downgraded MSTR to a “sell” just two weeks after initiating coverage with a neutral stance, citing limited future prospects for Strategy’s convertible issuance strategy.
Strategy currently holds 528,185 BTC on its balance sheet, having steadily increased its holdings through regular, large Bitcoin purchases funded mainly through common share issuances and the sales of its initial preferred stock series STRK. Despite this, Gala believes that raising additional funds via share issuance will become progressively harder, which could limit the company’s ability to continue its Bitcoin-buying spree.
Gala’s target price of $220 implies nearly a 30% downside from the stock’s current value, which is hovering around the $300 mark.
The analyst argued that if Strategy cannot rely more heavily on fixed income vehicles for financing, its Bitcoin treasury strategy could face significant challenges. To date, MSTR has already utilized $18.6 billion of its $21 billion common share at-the-market offering, and it raised another $711 million last week through its second preferred stock series, STRF.
