TD Cowen Defends Strategy’s Stock Valuation

Analysts at TD Cowen have dismissed critics’ claims of Strategy’s stock being overvalued as “logically flawed,” reports The Block.

They argue that the company’s strategy of issuing shares and raising capital does not dilute, but rather increases, each investor’s share of bitcoin.

The premium on Strategy’s net asset value stands at 72.6%. This is the difference between its market capitalization of $124.3 billion and the value of bitcoins on the company’s balance sheet, which is $72 billion.

Critics refer to this as the “greater fool theory,” suggesting that investors are overpaying for shares in the hope of selling them at an even higher price. TD Cowen analysts disagree, asserting that the premium is justified by MSTR’s ability to attract cheap capital for bitcoin purchases, creating returns unavailable to retail investors.

As an example, they cited a recent transaction. Strategy sold shares worth $739.8 million and used the proceeds to purchase 6,220 BTC. Consequently, the bitcoin share per MSTR increased by 20.8% since January 1 and more than doubled over the past 18 months.

The company continues to raise funds. Recently, it launched a fourth series of perpetual preferred shares for new cryptocurrency acquisitions.

The firm already owns 607,770 BTC and remains the largest public holder of bitcoin. TD Cowen forecasts that by the end of 2027, the company will have accumulated nearly 900,000 BTC (4.3% of the total digital gold issuance).

Earlier, the investment bank raised the target price of Strategy’s shares from $590 to $680 and predicted bitcoin would reach $155,000 by the end of the year.