Bitcoin Buying Strategy Now a Sell, Warns Wall Street Analyst Due to Growing Risks

Analyst Warns Strategy’s Bitcoin Buying Surge Could Face Major Obstacles Soon

Michael Saylor’s company, Strategy (MSTR), has seen its stock soar by over 2,500% in the last five years thanks to its aggressive Bitcoin (BTC) acquisition strategy. However, according to analysts at Monness, Crespi, Hardt & Co., this meteoric rise could soon slow down.

Gus Gala, an analyst at Monness Crespi, downgraded the stock to a “sell” just two weeks after initiating coverage with a neutral rating. In his report, Gala noted that while the strategy has paid off for the company in the past, the method of raising capital for Bitcoin purchases through common share issuance is becoming increasingly difficult to sustain.

With 528,185 BTC currently on its balance sheet, Strategy has consistently added to its holdings, often raising funds through common share issuance and sales of its preferred stock series STRK. However, Gala argues that Strategy’s reliance on these methods will eventually run its course.

Gala’s revised target price for MSTR is $220, which suggests a near 30% downside from its current price of around $300. He warns that without greater use of fixed income vehicles, the company’s Bitcoin treasury strategy will become more challenging to sustain, and raising funds via shares may not be viable in the long term.

Strategy has already tapped $18.6 billion of its $21 billion common share offering, and last week, the company raised an additional $711 million through its second preferred stock series (STRF).