MicroStrategy (MSTR) Faces Scrutiny Over Its Bitcoin Acquisition Strategy

Strategy Inc., formerly known as MicroStrategy, is facing scrutiny about its ability to continue its aggressive Bitcoin acquisition strategy, according to a new analyst report.

TLDR; Strategy Inc., formerly known as MicroStrategy, is facing scrutiny about its ability to continue its aggressive Bitcoin acquisition strategy, according to a new analyst report.

The company, which holds over 528,000 Bitcoin valued at approximately $44 billion, saw its stock downgraded to "Sell" by Monness, Crespi, Hardt & Co. analyst Gus Gala.

Gala set a price target of $220 for MSTR shares, suggesting nearly 30% downside from current trading levels around $300. This comes just two weeks after the firm initiated coverage with a "Neutral" rating.

The analyst's main concern centers on Strategy's funding mechanisms. The company has purchased Bitcoin almost weekly for months, using common share issuance and preferred stock sales.

"While we were negative on several respects upon initiation, we have gained incremental confidence that the convertible issuance strategy is likely tapped," Gala wrote in his report.

The report notes that Strategy has already used $18.6 billion of its $21 billion common share at-the-market offering. The company also recently raised another $711 million through STRF, its second series of preferred stock.

Gala argues that Strategy will face increasing difficulty raising money through share issuance. This could force the company to rely more heavily on fixed income vehicles.

"If fixed income securities do not become a greater portion of issuance, the BTC treasury strategy will look increasingly challenged," according to the analyst.

Not all analysts share this bearish outlook. TD Cowen's Lance Vitanza maintained a "Buy" rating on Strategy shares with a $550 price target - more than double Gala's estimate.

Vitanza views Strategy's recent financial maneuvers positively. He highlighted the company's new fixed income instrument as a strategic move to accelerate Bitcoin purchases.

"The issuance of non-convertible preferred shares allows Strategy to advance its Bitcoin acquisition strategy," Vitanza noted. This approach appeals particularly to investors bullish on Bitcoin.

The TD Cowen analyst expects Strategy to finance dividends on its new preferred shares mainly through common equity issuance. He sees the transaction as a way to "front-load" Bitcoin purchases that would otherwise happen quarterly over multiple years.

Bitcoin Strategy

Strategy's Bitcoin holdings continue to grow despite these funding concerns. The company recently acquired 22,048 additional Bitcoins at a cost of approximately $1.92 billion.

This purchase brings Strategy's total holdings to 528,185 Bitcoin, acquired at an average price of $67,458 per Bitcoin. The company funded these acquisitions through proceeds from its Common ATM and STRK ATM programs.

From March 24 to March 30, 2025, Strategy sold 3,645,528 MSTR shares and 213,807 STRK shares. These sales generated net proceeds of $1.20 billion and $18.52 million, respectively.

The company also introduced a new class of capital stock - the 10.00% Series A Perpetual Strife Preferred Stock. It issued 8.5 million shares as part of a public offering.

Strategy's approach has produced remarkable returns for long-term investors. MSTR shares have soared over 2,500% in the past five years, reflecting Bitcoin's rising value.

However, the competing analyst views highlight the uncertainty surrounding Strategy's future. The company's current ratio of 0.71, according to InvestingPro data, suggests potential challenges in meeting short-term obligations.

Bernstein SocGen Group provides yet another perspective. They maintain an "Outperform" rating on Strategy with a $600 price target, citing the company's strategic capital structure and expanded Bitcoin holdings.

Strategy, originally founded as an enterprise software company in 1989, is now widely viewed as a leveraged play on Bitcoin. Including debt, the company is valued at approximately $90 billion today.

The stock's future depends largely on two factors: Bitcoin's price performance and Strategy's ability to sustain its funding model for continued acquisitions.