Strategy shares tumble after Bitcoin drops, TD Cowen cuts target

Strategy Inc. shares fell more than 8% on Tuesday after Bitcoin dropped below $60,000, a decline that led TD Cowen to lower its price target for the company.

TD Cowen reduced its target to $260 from $400 and kept a Buy rating. Analyst Lance Vitanza wrote the lower target reflects Bitcoin’s current price rather than a loss of conviction in Strategy’s business model. The firm also trimmed its Bitcoin forecast to about $100,000 by the end of 2026 from a prior $140,000 outlook.

The company outlined a revised financial framework aimed at strengthening liquidity and reducing reliance on preferred and equity issuance to fund Bitcoin purchases. Strategy authorized up to $1.25 billion in Bitcoin sales to bolster a $2.55 billion U.S. dollar reserve that the company said will be used to meet annual dividend and interest obligations. Management also announced a $1 billion common stock buyback program and raised the annual dividend on its Stretch preferred shares (STRC) to 12% from 11.5%.

CEO Phong Le has signaled a change in approach, stating, “We are not going to sit back and just say we will never sell the Bitcoin.” He added the company is “evolving from one-way capital issuance to active capital management.” The company executed its first strategic Bitcoin sale at the end of May, excluding a tax-related disposition in 2022, and paused regular Bitcoin purchases during the six days ended June 28.

Stretch preferred shares have traded well below their $100 par value, slipping under $74 last week, which reduces Strategy’s ability to raise fresh capital through the preferred market. Citi Research analyst Peter Christiansen described the financial overhaul as “buying more time,” saying a larger cash reserve and the option to sell Bitcoin give the company added flexibility while prices remain under pressure.

As of Monday, Strategy held 847,363 Bitcoin acquired for roughly $64.1 billion, an average purchase price near $75,651 per coin. The stock’s market multiple of net asset value, or mNAV, was about 1.04, indicating shares continued to trade at a premium to the value of its Bitcoin holdings, though that premium has narrowed.

TD Cowen said it still expects both Strategy and Bitcoin to recover by year-end but at lower levels than previously forecast. Vitanza had expected the company would selectively sell Bitcoin to support dividend payments where appropriate.