Cantor cuts Strategy target, says forced selling fears overblown

Cantor Fitzgerald analyst Brett Knoblauch lowered the firm’s price target on Strategy (MSTR) to $229 from $560 and keeps an Overweight rating on the shares. It believes fears around the company as overblown. With 650,000 bitcoin priced at $92,600 each, Strategy has an estimated $155 per share of bitcoin on a fully adjusted share count basis, which also backs out the value of its preferreds, the analyst tells investors in a research note. Cantor reduced Strategy’s annual capital market proceeds from $22.5B to $7.8B and the stock’s assumed net asset value at which it can raise those funds with the recent pullback in bitcoin prices. However, the firm believes Strategy’s current share price to net asset value dynamic “gives shares positive convexity to bitcoin price appreciation.” Cantor says fears around the company being forced to sell its bitcoin are not warranted. Strategy has enough cash to fund dividends for 21 months, and its bitcoin position, worth $60.7B, compares to its notional debt of $8.2B, the firm contends.