Key facts
- MicroStrategy's stock is on pace for its eleventh losing month in the past twelve, with shares down 41% in June.
- TD Cowen slashed its price target for MicroStrategy to $260 from $400, citing Bitcoin's ongoing weakness.
- The firm's new capital management framework allows for potential Bitcoin sales of up to $1.25 billion.
- MicroStrategy's cash reserves have expanded to $2.55 billion.
- Bitcoin has fallen more than 20% in the past month and is below $60,000.
MicroStrategy's stock (MSTR) is on track to record its eleventh losing month in the past twelve, with shares down approximately 41% in June, marking its worst monthly performance since 2022. TD Cowen significantly lowered its price target for the company's shares to $260 from $400, citing Bitcoin's persistent weakness and adjusting its year-end forecast for the digital asset downward.
The investment bank's analysts, led by Lance Vitanza, recalibrated their expectations as Bitcoin struggled to maintain momentum, falling below $60,000 on Tuesday and experiencing a more than 20% decline over the past month. MicroStrategy's stock also saw an 8.6% drop on Tuesday.
Despite the stock's performance, TD Cowen expressed a positive outlook on MicroStrategy's newly unveiled capital management framework. This framework, which outlines how the company will manage its cash, preferred stock, and Bitcoin holdings, aims to improve credit visibility and capital flexibility. The company also signaled an expansion of its cash reserves to $2.55 billion.
Key aspects of the framework include a potential sale of up to $1.25 billion in Bitcoin to bolster cash, a move analysts believe could restore confidence during a prolonged Bitcoin downturn. The framework also allows for the repurchase of $1 billion in common shares and $1 billion in preferred shares, potentially creating arbitrage opportunities. The preferred stock's dividend rate was recently hiked to 12%.