Strategy (MSTR) Stock Price Target Cut to $260 from $400 Amid Bearish BTC Projection

The Strategy (MSTR) stock has recorded a robust rally on Monday, closing the session with a gain of over 12%. The rally came as Michael Saylor’s firm unveiled a new framework that will allow it to monetize part of its Bitcoin treasury while strengthening its balance sheet.

However, the enthusiasm has slightly faded today as TD Cowen has lowered its price target for MSTR. Notably, the analysis has pointed to a weaker Bitcoin (BTC) outlook rather than concerns over the company’s latest financial strategy.

TD Cowen Cuts MSTR Stock Price Target

The sharp gain in Strategy stock on Monday has coincided with a cautious outlook from a TD Cowen analyst. The investment banking firm has lowered its price target on the MSTR stock from $400 to $260, which has fueled discussions among traders over the possible reasons behind the cut.

However, it’s worth noting that the firm has still maintained its “buy” rating for the stock, indicating a potential upside from current levels. The latest reports showed that TD Cowen’s revised target is primarily based on a lower long-term Bitcoin projection instead of Strategy’s newly announced capital allocation plan.

Besides, the firm described the updated framework of Strategy as a positive development that could gradually improve the company’s financial flexibility. The brokerage also suggested that even with the reduced target, the stock still offers substantial implied upside of 200%.

This indicates that its long-term confidence in Strategy stock remains intact. However, expectations for Bitcoin’s future performance have become more conservative, resulting in a reduced price target for the MSTR stock.

Meanwhile, the revision arrives at a time when Strategy continues to evolve beyond its aggressive Bitcoin accumulation strategy. Recently, it has introduced new measures to balance its digital asset exposure with shareholder returns.

Strategy Faces Backlash Over Bitcoin Sale

Strategy announced a new Digital Credit Capital Framework through a regulatory filing on June 29. As per the filing, Strategy can generate up to $1.25 billion through Bitcoin sales.

Meanwhile, the proceeds will be utilized for its US dollar reserve and for funding preferred dividend payments, meeting interest obligations, building cash reserves, and supporting future share repurchase initiatives.

Alongside its Bitcoin monetization initiative, Strategy approved a plan to repurchase up to $1 billion of its Digital Credit Securities. The program may cover STRC, STRF, STRD, and STRK if management believes the buybacks would strengthen the company’s capital structure.

The company also revealed that it has paused further Bitcoin acquisitions while selling about $1.15 billion worth of MSTR shares as part of its broader capital management strategy. This comes after a Grayscale executive recently suggested that a $3 billion Bitcoin sale by Strategy could ultimately strengthen investor confidence in both MSTR stock and STRC.

However, this Bitcoin selling update has received immense criticism from market experts. The critics argue that selling Bitcoin could weaken market sentiment and contribute to broader price pressure.

Ripple CEO Brad Garlinghouse has publicly criticized Michael Saylor’s Strategy for the current crypto market downturn. Besides, Michael Saylor’s continued urging of market participants not to sell their Bitcoin has further fueled debate among market watchers.