Recent fluctuations in Strategy’s (MSTR) share price have sparked vocal criticism from retail investors. Many are pointing fingers at Executive Chairman Michael Saylor, claiming he has weakened discipline by relaxing a self-imposed guideline focused on equity issuance. This guideline was aimed at preventing the company from issuing new equity when its premium to its bitcoin holdings—termed market net asset value (mNAV)—dipped below a threshold of 2.5x.
However, analysts like Mark Palmer from Benchmark contend that these complaints misinterpret the root of the issue. According to a report released Tuesday, Palmer argues that the stock’s downturn is more reflective of general market dynamics—specifically a shrinking premium to bitcoin net asset value and ongoing volatility in both crypto and macro markets—than of any mismanagement related to capital allocation.
On August 18, the company revised its guidance to allow for strategic equity issuance even below the 2.5x mNAV threshold, a move Palmer characterizes as restoring necessary flexibility rather than an impulsive decision. This update enables Strategy to continue acquiring bitcoin, even during downturns, thereby sustaining its accumulation strategy. Palmer notes that this adaptability in managing the balance sheet is a consistent theme for the company, which has also engaged in paying down restrictive debts, refinancing through convertible bonds, and innovating with perpetual preferred stock to provide permanent capital without the risk of needing refinancing.
Palmer highlights that such financial innovations represent one of Strategy’s most underrated strengths. The firm’s preferred stock program has fostered new bitcoin-linked instruments that appeal to hedge funds and volatility traders, further validating the company’s strategic direction and broadening its investor base. Each successful instrument issuance reaffirms the demand for bitcoin-tied fixed income opportunities and enhances the company’s standing as a credible issuer innovating at the convergence of cryptocurrency and traditional financial markets.
Looking ahead, Strategy may be on the verge of a significant milestone: potential inclusion in the S&P 500 index. Should the company be admitted, it could attract billions in passive inflows and align itself with other crypto-centric firms like Coinbase (COIN) and Block (XYZ), thus integrating crypto exposure into the portfolios of mainstream equity investors.
Palmer maintains a positive outlook on Strategy, reiterating a buy rating alongside a price target of $705. If achieved, this target implies more than a double from the company’s current share price of $332. In recent developments, Strategy has also opted to add another 4,408 bitcoin for $450 million, further emphasizing its commitment to expanding its bitcoin holdings amid market fluctuations.
