Bitcoin Giant Strategy's 'Premium' Nearly Vanished Last Year—Analysts Expect a Comeback
Bernstein analysts predict that Strategy’s growth prospects should improve alongside a recovery in Bitcoin’s price. The firm, currently trading at a modest premium to its net asset value (NAV), is expected to regain a higher multiple as investor concerns over its potential Bitcoin liquidation subside. Historically, its mNAV averaged 1.57, but this dropped to 1.02 last year as Bitcoin’s price and sentiment weakened. Strategy has also issued multiple preferred stock offerings to fund more Bitcoin purchases, raising questions about its ability to maintain dividend payments as Bitcoin prices fell. Nevertheless, analysts see the company as a key beneficiary of a Bitcoin rebound and maintain an “Overweight” rating with a $450 price target. Strategy holds a $2.25 billion cash reserve to prepay dividends, which has been viewed as prudent despite concerns over possible MSCI index delisting and equity dilution. Analysts believe fears about dividend payments and convertible debt maturity are overstated due to the company’s strong reserves. Investors are also watching whether Strategy might sell Bitcoin in 2024, though this scenario is considered unlikely.
