Strategy (MSTR) shares have faced a brutal correction, falling 15% year-to-date and a staggering 72% from their November 2024 peak. The downturn led Canaccord Genuity analyst Joseph Vafi, one of the stock’s most vocal supporters and a 5-star-rated analyst on TipRanks, to slash his price target from $474 down to $185. Despite the 61% reduction, Vafi maintained a Buy rating, suggesting that the current price of roughly $133 still offers significant upside if the market stabilizes.
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What Is Bitcoin’s ‘Identity Crisis’?
Vafi’s change in outlook stems from Bitcoin’s failure to behave like “digital gold” during recent global uncertainty. While precious metals have surged due to geopolitical tensions, Bitcoin has traded more like a high-risk tech stock. Vafi noted that the cryptocurrency is currently in the midst of an “identity crisis,” explaining that while it remains a long-term store of value, it is increasingly sensitive to liquidity and risk appetite rather than acting as a safe haven.
Vafi Remains Confident in Strategy’s Structural Integrity
Even with the lowered price target, the analyst remains confident in the company’s structural integrity. Strategy holds over $44 billion in Bitcoin against roughly $8 billion in debt. This ratio provides a buffer that allows the firm to handle the current crypto winter without facing immediate liquidation risks. Vafi pointed out that the company’s debt is modest relative to its massive holdings, and the first major convertible note isn’t due until 2027.
Strategy’s Earnings Take a Backseat
Strategy is expected to report its quarterly results this week, but Vafi argues that the numbers have become “largely immaterial” because the company’s value is now almost entirely tied to the price of Bitcoin. A significant unrealized loss is expected following the sell-off in the fourth quarter. Vafi’s new $185 target is based on a conservative outlook, assuming a 20% recovery in Bitcoin prices and the stock returning to a slight premium over its net asset value.
Is Strategy Inc a Buy or Sell?
According to TipRanks, MSTR stock has a consensus Strong Buy rating among 11 Wall Street analysts. This rating is based on nine Buys and two Holds assigned in the past three months. The average 12-month MSTR price target of $387.67 implies 200.7% upside from current levels.
