AllianceBernstein has cut its price target on Strategy, the company formerly known as MicroStrategy, from $450 to $350. The firm kept its outperform rating intact.
The revision, dated August 26, reflects Bernstein’s updated thinking on Bitcoin’s market cycle, the corrosive effects of equity dilution on Strategy’s valuation model, and a macroeconomic backdrop that has become considerably less forgiving for companies that finance their Bitcoin buying sprees by printing new shares.
The macro case behind the cut
Bernstein’s analysts pointed to what they describe as the end of a roughly 40-year period during which interest rates were in a structural decline. Governments are now staring down record levels of sovereign debt while simultaneously facing soaring debt-servicing costs.
For Strategy, higher-for-longer interest rates mean the cost of its aggressive Bitcoin acquisition playbook has gone up. The company has consistently tapped equity markets to fund its Bitcoin treasury strategy, issuing new shares to raise capital for additional purchases.
