TD Cowen rebutted criticism that the market capitalization of Strategy (STR) should be indexed exclusively on Bitcoin assets, stating that this approach is logically flawed.
TD Cowen: Premium Value of Strategies Justified by the Bitcoin Capital Cycle
Analysts argue that the company’s aggressive stock issue will increase its interest in the stock rather than dilute the stock of investors.
The strategy currently has a market capitalization of $124.3 billion, with a total Bitcoin holding of about $72 billion. This brings the company’s trading premium to 72.6% above its Net Asset Value (NAV). TD Cowen analysts Lance Vitanza and Jonnathan Navarrete say the premium cannot be explained in “Big Fool Theory.”
“Critics argue that the assessment of the strategy is based solely on another investor in the market who buys at a higher price. However, this is an incomplete perspective that ignores both the business model and the capital deployment strategy,” they said.
According to TD Cowen, the strategy increases the amount of Bitcoin per share by channeling low-cost capital into Bitcoin. This strategy offers the advantage that neither individual investors nor competing institutional companies can easily replicate. The company emphasizes that it can raise capital through low interest rate borrowing at 0.421%, which translates directly into Bitcoin returns.
900,000 BTC targets for 2027
Last week, the strategy raised $739.8 million through sales of 1.6 million shares and three preferred shares issue as part of a $21 billion program in the market. The capital bought 6,220 bitcoins at an average price of $118,940. According to TD Cowen, the transaction increased the company’s BTC per share by 20.8% compared to January 1.
While maintaining its $680 target price for its strategic stock, TD Cowen predicts the company could reach 900,000 BTC by the end of 2027. This amount equals 4.3% of the highest Bitcoin supply ever.
The company also opened a new source of funding on Monday with the launch of its fourth series permanent preferred stock, called Stretch (STRC). With a reserve of 607,770 BTC as of July 21, the strategy is currently the world’s largest publicly traded Bitcoin holder.
*This is not investment advice.
