Bitcoin (BTC)’s Strategy (MSTR) aggressive purchases have sent over 2,500% of the shares over the past five years, but one analyst claims it could soon be reversed.
“We were negative with some respect at the start, but we’re gaining step-by-step confidence that a convertible issuing strategy is likely to be tapped,” said Monness Crespi analyst Gus Gala, who downgraded MSTR to sell just two weeks after starting coverage on neutrality.
The strategy currently holds 528,185 BTC on the balance sheet and has purchased a significant quantity almost every week for the past few months, funded primarily by regular stock issues and sales of the first priority series STRK.
Gala’s $220 price target suggests a downside of just 30% from the current price in the $300 area.
Gala argued that the strategy would become increasingly difficult to raise funds to buy Bitcoin via stock issuance, and the company was forced to shift to bonds.
“If bond securities are not the majority of issuance, then BTC financial strategies appear to be increasingly challenging.”
Gala noted that MSTR is already using $18.6 billion in $21 billion in common stock. The company also raised an additional $7111 million through STRF last week. This is the second preferred stock series.