Strategy’s MSTR shares have fallen over 8% to close at $84.68 despite the company unveiling a new Digital Credit Capital Framework, and Benchmark Equity Research repeating its Buy rating and $570 price target on the stock.
Benchmark’s target implies about 515% upside from Monday’s closing price. The firm said Strategy’s new framework gives management more tools to repurchase securities, manage preferred share obligations, and monetize Bitcoin holdings during periods of market stress.
The move came after a sharp weekly decline in MSTR shares and renewed concern over Strategy’s capital structure. STRC, the company’s variable-rate preferred security designed to trade near $100, recently fell below $80.
Benchmark Keeps $570 Strategy Target
Benchmark analyst Mark Palmer said Strategy’s new framework allows the company to manage both sides of its capital structure. He said the company can now issue securities when market conditions are favorable and repurchase them when buybacks are more attractive.
“The upshot is that Strategy is now an active manager of both sides of its capital structure, an approach that we view as a significant positive for its shareholders,” Palmer wrote in a client note.
The framework includes a $2.55 billion reserve, equal to 17.4 months of dividend coverage. It also includes a $1 billion common stock repurchase program and a $1 billion preferred share buyback plan covering STRC, STRF, STRD, and STRK.
Strategy’s board also authorized the sale of up to $1.25 billion in Bitcoin from its 847,363 BTC treasury. Benchmark said concerns about aggressive Bitcoin liquidation may be overstated because the sale authorization is small compared with Strategy’s total Bitcoin position.
Analysts Split on MSTR Price Targets
TD Cowen also maintained a Buy rating on Strategy but cut its price target to $260 from $400. The firm said the reduction was tied to a lower Bitcoin price forecast, not Strategy’s new capital framework.
TD Cowen described the framework as “incrementally constructive,” according to market reports. The bank’s new target still implies more than 200% upside from recent trading levels.
Canaccord Genuity also reduced its 12-month target for Strategy to $130 from $163 while keeping a Buy rating. The cut reflected pressure from Bitcoin volatility, capital structure risk, and investor concern over Strategy’s funding model.
Canaccord said Strategy’s Bitcoin acquisition model works better when moving forward than in reverse. Matthew Sigel shared Canaccord’s comment that, “Like an automobile, which drives better in forward gear versus reverse, so does MSTR’s BTC acquisition model.”
Strategy Framework Targets Capital Stress
As we reported, Strategy introduced the framework after MSTR fell about 30% over the prior week. The company’s market value had also briefly fallen below the value of its Bitcoin holdings, adding pressure on investor sentiment.
The new plan gives Strategy more flexibility to pause common stock issuance when shares do not trade at a premium to net asset value. It also allows management to repurchase shares or preferred securities when those actions are judged to be accretive.
The company’s preferred stock structure has become a key market focus. STRC sits above common stock in the capital structure and was designed to offer lower volatility exposure than MSTR shares.
However, the need to fund preferred dividend obligations has raised dilution concerns. STRC’s decline below par increased pressure on Strategy to show it can support the security without relying only on new stock issuance.
Bitcoin Weakness Weighs on Strategy Shares
Strategy remains closely tied to Bitcoin’s price action. Bitcoin recently traded near $58,487 and is on track for a third straight negative quarter, while falling about 20% in June.
MSTR is set to end the month about 41% lower, which would mark its worst monthly performance since 2022. The stock has also posted negative monthly performance in 11 of the last 12 months. At press time, MSTR was down 8.90%, trading at $84.
As we reported, MSTR reached an all-time high of $540 in November 2024 before entering a prolonged decline. Since STRC’s debut, Bitcoin has fallen nearly 50%, while MSTR has dropped about 77%.
Benchmark’s bullish view depends on Strategy using its new framework to stabilize investor confidence, manage dilution, and preserve Bitcoin exposure. Other analysts remain positive but have lowered targets as Bitcoin price forecasts weaken and capital structure concerns remain.
