Strategy Faces ‘Dilution Drag’ as TD Cowen Raises Bitcoin Forecast to $109,000

TD Cowen on Thursday raised its Bitcoin (CRYPTO: BTC) forecast to $109,000 but held its Strategy (NASDAQ:MSTR) target steady at $260, citing dilution risk.

Why Higher Bitcoin Prices Don’t Fully Flow Through

TD Cowen analysts Lance Vitanza and Jonnathan Navarrete wrote in a report, cited by The Block, that Strategy’s capital structure is eating into the per-share gains investors might otherwise expect from a stronger Bitcoin (CRYPTO: BTC) price. 

The analysts kept their Buy rating, arguing bitcoin ownership per MSTR share has become “less robust” once debt and preferred shares like STRC (NASDAQ:STRC), STRF and STRD are factored in, since those holders have claims ahead of common shareholders.

Part of the issue traces back to how Strategy deploys new capital. Rather than funneling every dollar raised straight into Bitcoin purchases, the company is building cash reserves and supporting its preferred share lineup. 

That approach can help attract investors long-term, but it leaves less capital available for immediate buying.

Where Strategy’s Valuation Stands Now

Strategy’s valuation has climbed back to roughly one times net asset value after dropping as low as 0.63 in June, according to Saylor Tracker.