“The Wall Street bank initiated coverage of Strategy with a buy/high risk rating and a $485 price target.”, — write: www.coindesk.com
MSTR shares were 1.5% higher in early trading on Tuesday, around $301.
The price target reflects Citi’s 12-month bitcoin forecast of $181,000, representing 63% upside from current levels, and a 25% to 35% net asset value (NAV) premium, which aligns with Strategy’s historical 2.5x to 3.5x bitcoin yield multiple, the bank said in the Tuesday report.
That structure, the bank’s analysts argued, makes the stock an amplified play on bitcoin’s performance, with outsized upside in bull markets and sharp drawdowns if prices reverse.
Under Citi’s bear-case scenario, with bitcoin down 25% and the NAV premium swinging from 35% to a 10% discount, the stock could lose about 61%.
The bank credits the company’s pivot to bitcoin in 2020, led by Executive Chairman Michael Saylor, as the model for the digital asset treasury strategy.
Strategy is expected to keep issuing convertible debt, preferred equity and stock, depending on the NAV premium, to expand its bitcoin position, the report said.
The report noted that the company’s bitcoin yield, the year-to-date increase in BTC per fully diluted share, has been a key driver of the NAV premium.
Strategy said it had purchased another 168 BTC at an average price of $112,051, bringing total holdings to 640,418 BTC, in a filing on Monday.
Read more: Strategy Expands Bitcoin Holdings to 640,418 BTC With Latest Purchase
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Watching from the sidelines for weeks as precious metals scored record highs on a regular basis, bitcoin on Tuesday was gaining as gold and silver posted their steepest declines in years.
- Falling below $108,000 just hours ago, bitcoin surged just shy of $113,000 as precious metals experienced a steep selloff Tuesday.
- Gold plunged 5%, its largest daily drop in years, while silver fell nearly 8%.
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