Strategy has had a bruising year on the stock market. Its shares are down about half from a year ago, and one Wall Street bank thinks the worst may be behind it. Mizuho, one of Japan’s three
Strategy has had a bruising year on the stock market. Its shares are down about half from a year ago, and one Wall Street bank thinks the worst may be behind it.
Mizuho, one of Japan’s three mega-banks and a designated Global Systemically Important Bank, reaffirmed its “Outperform” rating on Strategy (MSTR) after the company’s third-quarter earnings call. It also kept a $165 price target.
That’s about 26% above Friday’s close of $130.51.
Strategy, led by executive chairman Michael Saylor, is the world’s largest corporate holder of Bitcoin. It raises money by selling stock and debt-like securities, then uses the cash to buy Bitcoin.
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Mizuho analyst Dan Dolev pointed to a stronger balance sheet.
Strategy held 848,517 Bitcoin as of Oct. 25, according to its third-quarter results. It also held $5.07 billion in U.S. dollar assets.
The company says that’s enough to cover about 3.4 years of preferred stock dividends and interest on its debt.
Mizuho also noted that Strategy’s net leverage, a measure of debt against the value of its assets, fell to 2.4% from 8.4% in the second quarter.
There’s a catch.
Strategy’s Bitcoin per share is down 3.7% so far this year, which means the company issued new shares faster than it added coins. That kind of dilution has worried some investors.
The stock rose Monday after Strategy disclosed new buying. It bought 811 Bitcoin for about $65.5 million between Oct. 26 and Nov. 1, at an average price of $80,846 per coin.
That lifts its holdings to 849,327 Bitcoin.
The company paid for the purchase by selling about 1.18 million Class A shares, raising $164 million.
At the time of writing on November 1, Bitcoin was trading at $76,924.
Bitcoin price at press time. Source: DecibelIt also bought back $208.2 million of STRC, its “Stretch” preferred stock.
Preferred stock pays a fixed dividend and ranks ahead of common shares. STRC currently pays a 12% dividend.
Strategy shares were trading at $136.21 as of 10:18 p.m. IST on Nov. 2, up 4.37% on the day.
The stock is still down 12.10% this year, but it has gained 44.69% over the past three months.
