After a brutal stretch, Strategy (MSTR) is winning back some believers. Canaccord Genuity recently raised its price target from $130 to $175 and kept a “Buy” rating on MSTR stock. Analyst Joseph Vafi said the company’s balance sheet is now “war-chested” with enough cash to do more than just cover its dividends. The stock, which is essentially a bet on Bitcoin (BTCUSD), jumped about 12% on Aug. 27 as the cryptocurrency rallied above $80,000. Formerly known as MicroStrategy and chaired by Michael Saylor, Strategy is the world’s largest corporate holder of Bitcoin.
Strategy is coming off a rough patch. From mid-May to late June, MSTR stock was cut by well over half. When BTC crashed to around $58,000 in late June, Strategy sat on a paper loss of roughly $13 billion, about a fifth of what it paid for its coins. The recent rally flipped that loss back into a profit, with Bitcoin now trading above Strategy’s average purchase price but below the $80,000 mark again, currently changing hands at around $77,300 per coin.
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The Number That Really Drives This Stock
Strategy’s whole model depends on trading above the value of the Bitcoin it owns. When Strategy sits well above the value of its coins, Saylor can sell new shares at the higher price, buy more Bitcoin, and lift the amount of Bitcoin behind each share. This is exactly what he did on Aug. 24. That gap is the engine that makes the whole thing work.
This year, the engine nearly died. The gap shrank until the stock was worth barely more than its Bitcoin, and at that point selling new shares stops helping anyone. To me, that is the real story behind this year’s struggle, not just the falling BTC price.
So, Canaccord’s call is about more than just Bitcoin going up. Vafi’s target assumes BTC rises and that the gap widens again. If that happens, the whole engine restarts. If it doesn’t, buying the stock makes little sense over just owning Bitcoin.
Strategy operates as a Bitcoin treasury company. It offers investors varying degrees of economic exposure to Bitcoin through a range of securities, including equity and fixed-income instruments. The company also provides AI-powered enterprise analytics software. This includes Strategy One, which provides non-technical users with the ability to directly access novel and actionable insights for decision-making. In addition, the company provides Strategy Mosaic, which helps companies organize and manage data from multiple sources. Founded in 1989, the company is headquartered in Tysons Corner, Virginia.
Over the past year, MSTR stock has declined 64%. Similarly, the iShares Bitcoin Trust ETF (IBIT) has declined 31% during the same period. The trend has continued this year as well, with the stock down 19% while IBIT has declined 12%. MSTR stock has been fairly volatile, climbing from roughly $119 on April 2 to $195 by May 11, then falling down to $82 within about a month. After that, Strategy stock traded relatively sideways before rallying sharply following Aug. 18. The gain was primarily driven by a rise in Bitcoin prices, which benefited from improving sentiment toward cryptocurrencies following U.S. policy developments.
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Management Reaffirms Long-Term Bitcoin Strategy
Strategy reported second-quarter fiscal 2026 earnings on July 30. The company posted revenue of $122.4 million, below the $122.9 million forecast. Loss per share came in at $24.45, also missing the Wall Street consensus. Strategy reported an operating loss of $8.3 million and a net loss of $8.6 billion, driven mainly by a non-cash Bitcoin mark-to-market charge. Management said the company added 83,901 BTC during the quarter at an average price of about $75,500 per coin. That brought the company’s Bitcoin holdings to 843,775 BTC, equal to roughly 4% of all Bitcoin that will ever exist. Moreover, the balance sheet also improved in some areas. Long-term debt declined after the company repurchased 1.5 billion of convertible debt at an 8% discount. Preferred equity rose to $14.4 billion, helped by strong issuance of STRC, the company’s digital credit product.
Looking forward, the company said it wants to keep building Bitcoin per share, expand its digital credit platform, and maintain a strong USD reserve. Strategy expects to keep issuing preferred equity and digital credit, while also reducing debt over time. Moreover, the company also said it wants to return STRC, its flagship digital credit product, to a trading range of $99 to $100. However, the company’s earnings and balance sheet can change sharply with BTC prices, creating large reported gains or losses.
Bernstein recently lowered its price target on MSTR stock from $450 to $350 and kept an “Outperform” rating. The firm believes a long period of falling interest rates is over, which could make it harder for governments to manage their growing debt burdens. In addition, Canaccord analyst Joseph Vafi maintained a “Buy” rating on MSTR stock while raising his price target to $175 from $130. The analyst said the outlook has improved significantly in recent weeks due to a combination of company-specific developments and favorable macroeconomic conditions. These factors have increased confidence in Strategy’s prospects and supported a more positive view of the stock.
Based on 19 Wall Street analysts with coverage, MSTR stock holds a consensus “Strong Buy” rating overall. Out of those analysts, 16 have a “Strong Buy” rating, one has a “Moderate Buy” rating, one has a “Hold” rating, and one has a “Strong Sell” rating. The mean price target of $224.25 reflects 82% potential upside from current levels, while the high price target of $435 implies impressive potential upside of 254% from here. This upside reflects strong confidence in Strategy’s long-term growth prospects.
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On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
