Shares of Strategy, formerly known as MicroStrategy, have experienced a 16% decline year-to-date, closely mirroring Bitcoin’s (BTC) recent downward trend. On February 25, Bitcoin’s price fell approximately 4% to around $88,000, intensifying concerns about the sustainability of Strategy’s aggressive Bitcoin acquisition strategy.
Market analysis firm The Kobeissi Letter highlighted that the company’s approach heavily relies on its capacity to raise additional capital backed by its expanding Bitcoin holdings. They cautioned, “In a situation where their liabilities rise significantly higher than their assets, this ability could deteriorate.”
Analysts Maintain Optimism
Despite the recent stock downturn, financial analysts remain optimistic about Strategy’s future. On February 6, Benchmark analysts raised the company’s price target to $650, expressing confidence in Strategy’s continued aggressive capital raising to support its Bitcoin acquisition plans throughout the year.
This positive outlook is rooted in the company’s strategy to generate “Bitcoin yield,” focusing on the ratio of Bitcoin holdings to outstanding shares. Strategy aims for a Bitcoin yield of 15% in 2025, suggesting a robust financial performance linked to its cryptocurrency assets.
Debt-Fueled Bitcoin Purchases
Since 2020, Strategy has invested over $33 billion in Bitcoin, acquiring the cryptocurrency at an average cost of approximately $66,000 per coin. This aggressive acquisition strategy has been financed through a combination of stock issuance and approximately $9.5 billion in convertible debt. Notably, the majority of this debt does not mature until 2027 or later, reducing the immediate risk of a Bitcoin price downturn necessitating the liquidation of holdings. The Kobeissi Letter emphasized that for such a scenario to force liquidation, Bitcoin’s price would need to fall by more than 50% from current levels and remain depressed beyond 2027.
Stock Performance and Market Outlook
On February 25, Bitcoin’s price dipped below the $90,000 threshold for the first time since November 2024, coinciding with sell-offs in U.S. spot Bitcoin exchange-traded funds (ETFs). Consequently, Strategy’s shares dropped over 10% to approximately $245. This marks a significant decline from its all-time high of $473 in November, shortly after the company announced its ambitious goal to acquire $42 billion worth of Bitcoin by 2027. Other companies with similar Bitcoin treasury strategies, such as Semler Scientific, have also experienced comparable stock retracements, with Semler down more than 20% year-to-date.
Despite these challenges, Benchmark analysts remain confident in Strategy’s ability to generate “Bitcoin yield,” viewing the BTC-per-share metric as a key indicator of the company’s financial health. This focus suggests that, while market volatility presents risks, Strategy’s long-term approach to integrating Bitcoin into its corporate treasury may offer substantial returns, provided the cryptocurrency’s value appreciates over time.
