TD Cowen Trims MSTR Target to $260, Blames Bitcoin's Identity Crisis 📉

TD Cowen cut its price target on Strategy (MSTR) to $260 from $400 on Tuesday, trimming expectations by 35% while keeping a Buy rating on the stock. Analysts led by Lance Vitanza attributed the revision to $BTC's "observed ongoing weakness," forecasting the digital asset reaching $100,000 by year-end versus a prior $140,000 estimate. Bitcoin slipped back below $60,000 on Tuesday, trading at $58,400 according to CoinGecko, a decline of more than 20% over the past month and more than 53% from an all-time high above $126,000 set last October. Shares of MSTR fell 8.6% to $84.75, reversing gains from Monday's 12% rally that followed the firm's unveiling of a new capital management framework.

The price target reduction came independently of Strategy's Monday announcement of its Digital Credit Capital Framework, which the analysts described as "a positive for credit visibility and capital flexibility." The framework outlines how the company intends to manage its cash reserves, its flagship Stretch preferred stock (STRC), and its stockpile of 847,363 Bitcoin. Strategy's board also approved a program permitting the sale of up to $1.25 billion in Bitcoin to fund cash reserves, pay dividends on products such as STRC, or repurchase securities. The company indicated that cash reserves had expanded to $2.55 billion.

Analysts said the framework represents "a modestly positive step toward improving price stability" by tying STRC's dividend adjustments more explicitly to cash reserve management and future Bitcoin liquidations. On Monday, the preferred stock's dividend rate was raised for an eighth time to 12%, adding to the firm's recurring costs. STRC fell 0.7% to $83.11 on Tuesday, remaining below its $100 par value after hitting a record low of $71.25 last week. TD Cowen argued that linking these moves "should go a long way toward restoring confidence in the company's ability to weather a protracted Bitcoin downturn."

Since Strategy sold Bitcoin roughly a month ago for the first time since 2022, MSTR has dropped nearly 41% from $142.69.