‘Time to Be Cautious,’ Warns Analyst About Strategy Stock (MSTR)

Strategy (MSTR), the largest corporate owner of Bitcoin in the world, has seen a strong run, with the stock up about 31% year-to-date and 123% over the past year. For many investors, MSTR has become a popular way to gain exposure to Bitcoin without owning the cryptocurrency directly. Recently, the company has been raising capital through new stock and preferred share offerings to fund additional Bitcoin purchases. However, despite the impressive stock rally and growing enthusiasm around Bitcoin, Monness analyst Gus Gala remains cautious and sees limited upside from current levels.

The analyst reiterated a Sell rating and maintained his $175 price target, stressing that the recent price momentum doesn’t erase the underlying risks tied to the company’s strategy and financial structure.

Gala Sees Trouble Ahead amid Weak Demand

The analyst pointed to several challenges that, in his view, continued to weigh on the company’s financial outlook.

One of his main concerns was the weak investor demand for Strategy’s new preferred shares, Series A Perpetual Strike Preferred Stock (STRK) and Series A Perpetual Strife Preferred Stock (STRF). These offerings were intended to replace the company’s older convertible debt strategy to raise money, but the demand has been low, according to the analyst. So far, the company has raised only about $365 million, which is much less than expected. He noted that the lukewarm response suggested investors might be growing more cautious, which could make it harder for the company to raise the capital it needs in the future.

Gala also pointed out that more companies had started following the same Bitcoin-focused strategy as MSTR, increasing competition in this space. These include well-known names like GameStop (GME) and Trump Technology (DJT), as well as newer players like XXI Capital and Nakamoto. He said these companies were all vying for the same investors, and many were trading at prices far above their actual asset value. Gala saw this as a sign that the market might be nearing a peak, especially since the current Bitcoin rally had already lasted about 29 months, which was much longer than previous cycles.

Moreover, he remained wary of Strategy’s growing dependence on raising money by issuing more stock—both common and preferred. He pointed out that the newly launched preferred shares carried high dividend commitments, which could put additional pressure on the company’s finances over time.

Combined with an uncertain outlook for Bitcoin and what he described as signs of “peak cycle behavior” in the market, Gala believed these risks were too significant to ignore.

Is MSTR Stock a Buy, Sell, or Hold?

MSTR, earlier know as MicroStrategy, is a high-risk, high-reward stock. Currently, Wall Street is bullish on Strategy stock, with a Strong Buy consensus rating based on 12 Buys and one Sell recommendation. The average MSTR stock price target of $524.92 implies about 38.83% upside potential from current levels.

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