Citi has given Strategy a “buy” rating with a price target of $485, though the bank cautioned that the stock could dip alongside the price of Bitcoin. Strategy closed Tuesday trading at nearly $302 per share.
In a Tuesday note, Citi described Strategy stock as “a bellwether of BTC’s potential upside and downside momentum.” The bank highlighted that Strategy’s Bitcoin treasury, which trades on Nasdaq under the ticker MSTR, could continue to soar if Bitcoin (BTC) reaches the $181,000 12-month price target Citi set for the cryptocurrency last week.
According to Yahoo Finance data, MSTR closed up 1.7% at $301.91 per share. The stock’s record high price was $473.83 in 2024. Meanwhile, Bitcoin was priced at $111,490, down more than 11% from its October all-time high of $126,080, based on CoinGecko data.
Citi’s note stated, “Our view is that MSTR’s NAV premium can range between 25% and 35%, in line with the stock’s historical 2.5x-3.5x Bitcoin yield multiple, assuming continued positive momentum for Bitcoin.”
However, the bank also issued a warning: “The stock presents significant risks due to its positioning as a leveraged proxy for Bitcoin. Its value is nearly 100% tied to the sometimes-volatile cryptocurrency, meaning that even a moderate decline in Bitcoin’s price can lead to magnified losses for MSTR shareholders.”
Strategy—formerly known as MicroStrategy—began purchasing Bitcoin in August 2020 as a way to generate better returns for shareholders amid inflationary pressures that rocked the U.S. and global economies during the COVID-19 pandemic. It has since become the largest corporate holder of Bitcoin, primarily focusing on securitizing the cryptocurrency.
The company’s business model allows investors to buy its shares to gain exposure to Bitcoin, the leading cryptocurrency by market capitalization. Currently, Strategy holds 640,418 Bitcoins, valued at approximately $71.6 billion in digital assets. Strategy co-founder and chairman Michael Saylor frequently praises Bitcoin and its potential benefits for corporations.
https://decrypt.co/345267/bitcoin-giant-strategy-gets-buy-citi-warning