TLDR
- TD Cowen slashed Strategy’s price target to $440 from $500, blaming lower bitcoin yield from heavy equity dilution
- The company bought 13,627 bitcoins last week for $1.25 billion, pushing total holdings to 687,410 bitcoins
- Stock jumped 5.6% as bitcoin surged past $95,000, though shares remain 62% off July 2024 highs
- Bitcoin yield projected to tumble to 7.1% in fiscal 2026 versus 22.8% delivered in fiscal 2025
- MSCI won’t remove bitcoin treasury companies from indexes, providing temporary relief
Strategy shares rallied 5.6% to $182.71 as bitcoin broke above $95,000 for the first time since November. But TD Cowen isn’t celebrating, cutting its price target to $440 from $500.
The culprit? Deteriorating bitcoin yield as the company floods the market with equity.
Strategy now holds 687,410 bitcoins valued at more than $65 billion. The bitcoin treasury company continues building its position despite recent price weakness, but the funding strategy has analysts concerned.
TD Cowen expects Strategy to scoop up roughly 155,000 bitcoins during fiscal 2026, up from a prior 90,000 estimate. The catch is these purchases will lean heavily on common and preferred stock sales rather than debt.
That funding mix crushes bitcoin yield. Analysts led by Lance Vitanza now project just 7.1% yield for fiscal 2026, down from an 8.8% prior estimate. That’s a steep fall from the 22.8% yield Strategy posted in fiscal 2025.
Bitcoin yield tracks the percentage change in bitcoin held per fully diluted share. Lower yields mean less value creation for existing shareholders.
The reduced yield outlook translates to a BTC dollar gain of $6.315 billion for fiscal 2026, compared to the $9.4 billion analysts previously expected. TD Cowen applies a 5x multiple to reach the new $440 target.
Michael Saylor Doubles Down During Price Dip
Strategy didn’t slow down when bitcoin prices pulled back. The company issued approximately 6.8 million common shares and 1.2 million STRC preferred shares during the week ended January 11, raising $1.25 billion to fund bitcoin purchases.
Those transactions generated minimal bitcoin yield because equity was issued near parity with bitcoin prices. TD Cowen analysts said this approach only works if bitcoin recovers substantially.
They think it will. The firm models bitcoin reaching around $177,000 by December 2026 and approximately $226,000 by December 2027. Improving macro conditions and regulatory tailwinds support this view.
The Senate Banking Committee plans to review the Digital Asset Market Clarity Act on Thursday, which could provide regulatory clarity for the crypto sector.
Premium Collapses From Summer Peak
Strategy trades at just a 10% premium to its bitcoin holdings, a dramatic compression from the roughly 100% premium in summer 2024.
The stock hit a 52-week high of $457.22 last July when bitcoin traded around $122,000. Shares have plunged 62% since then. Bitcoin sits 24% below its October record high above $126,000.
Despite the price target cut, TD Cowen maintained a constructive stance on Strategy as a bitcoin exposure vehicle. The analysts highlighted opportunities across the capital structure, including five tranches of preferred stock offering income and appreciation potential.
MSCI announced earlier this month it won’t exclude bitcoin treasury companies from its indexes. TD Cowen views this as positive short-term news but cautioned that long-term uncertainty remains.
The analysts worry that major MSCI customers like BlackRock might perceive bitcoin treasury companies as competitors to their spot bitcoin ETPs. BlackRock’s bitcoin products represent its largest revenue source, and it accounts for 10.2% of MSCI’s fiscal 2024 revenue.
Strategy stock has climbed 20% year-to-date while bitcoin has gained 9.7% in 2026. The broader crypto rally lifted Ethereum, XRP, and Coinbase shares as well.
TD Cowen expects yield dynamics to flip in fiscal 2027, with bitcoin yield jumping to 8.1% and BTC dollar gain rising above $13.5 billion as higher prices improve future purchase economics.
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