Analyst downgrades MicroStrategy amid higher dilution

TD Cowen analysts have lowered their price target for Michael Saylor's Strategy shares, citing ongoing volatility and shareholder dilution. 

MicroStrategy (Nasdaq: MSTR), now rebranded as Strategy, has positioned itself as a digital-asset treasury vehicle, giving investors indirect exposure to Bitcoin (BTC) through equity markets. 

However, it is facing renewed scrutiny over its long-term positioning and its financial health.

Market re-evaluation and MSCI pressure

With Bitcoin’s price falling from nearly $126,000 in early October to around $82,000 level two weeks ago, the amplified effect on Strategy’s stock performance has again come into focus. 

JPMorgan earlier noted that the company may be removed from major equity indices, including the MSCI USA Index.

The MSCI USA Index is a major stock market benchmark created by MSCI (Morgan Stanley Capital International). It tracks the performance of large-cap and mid-cap U.S. companies and represents about 85% of the U.S. stock market.

On Dec. 2, MSCI said it is reviewing whether the company still qualifies for inclusion in several major equity benchmarks.

MSCI said it is evaluating a potential rule change that could exclude companies “whose business model is to buy cryptocurrencies,” arguing that such firms function more like investment funds than operating businesses. 

Strategy founder Michael Saylor confirmed the company is in “active discussions” with MSCI over the review.

The index provider’s decision, expected by Jan. 15, comes as the firm’s Bitcoin-heavy balance sheet model, once a driver of its stock’s meteoric rise, faces its most significant structural challenge yet.

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Wake-up call for Strategy’s balance sheet

On Dec. 1, Strategy announced the creation of a $1.44 billion United States dollar reserve, according to a filing with the U.S. Securities and Exchange Commission.

Dubbed the “USD Reserve,” the fund was financed through proceeds from the company’s at-the-market stock offering and is intended to support preferred-share dividend payments and service debt obligations.

The move follows a steep decline in Strategy’s market-implied net asset value (mNAV) — the ratio of enterprise value to Bitcoin per-share value — which has fallen toward 1x. This means Strategy’s stock is now trading nearly in line with the value of its BTC holdings, leaving little to no premium.

Phong Le, CEO of @Strategy, spoke with @BloombergTV today on our $1.44B USD Reserve, continuity of dividends, mNAV valuation, and recent market FUD, including index inclusion. pic.twitter.com/iEAsZN4kDG

— Strategy (@Strategy) December 2, 2025

TD Cowen sees new target amid higher dilution

TD Cowen’s revised $500 price target, down from $535, reflects what analysts called a “prudent” move to shore up liquidity during a volatile period, according to a Dec. 3 note.

“Shoring up liquidity during times of stress is always prudent, in our view, and we believe all Strategy stakeholders are materially better off,” the note said. 

“Strategy has gone a long way toward putting to bed any lingering questions around its ongoing access to capital markets.”

The bank added that the lower target price accounts for greater-than-expected dilution from capital raises used to fund preferred-share dividends, given Strategy’s stock is trading near its 13-month low. 

The analysts also reduced their earnings multiple from 9 times to 5 times, citing heightened volatility and increased leverage exposure.

While a $500 per-share estimate may seem “out of context” amid shifting sentiment, the analysts argued it remains reasonable given the company’s embedded leverage and the close correlation between its equity premium and Bitcoin’s price movements.

At press time, MSTR was down 1.17% and trading at $186.18.

Related: Michael Saylor explains MicroStrategy's more aggressive option to simply buying Bitcoin