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This optimistic analyst regarding Michael Saylor’s approach has now abandoned their high price expectations.
Canaccord’s Joseph Vafi reduced his price target on the declining bitcoin treasury company’s stock by over 60%.
Strategy price target reduced as bitcoin’s ‘identity crisis’ complicates short-term perspective: Canaccord. (CoinDesk)
Key points:
- Joseph Vafi of Canaccord lowered his price target for Strategy (MSTR) to $185 from $474, while still keeping a buy recommendation.
- Vafi had previously shown strong optimism regarding Michael Saylor’s firm, raising his price target as recently as November.
- Vafi stated that Strategy is designed to endure market fluctuations, highlighting the company’s limited debt compared to its bitcoin assets.
As the crypto winter has evidently set in, investors are now seeking indications that the prevailing bearish sentiment may be so entrenched that a bottom could emerge.
A notable example could be a statement from Joseph Vafi of Canaccord on Wednesday, significantly reducing his price target for Strategy (MSTR) by 61% to $185 from $474.
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Vafi, who increased his forecast for Strategy as recently as November (to that $474 level), still holds a buy rating on the stock, and his updated $185 target indicates approximately 40% potential upside from the previous close of $133.
Strategy has declined 15% year-to-date, 62% year-over-year, and 72% from its peak in November 2024.
According to Vafi, bitcoin is experiencing an “identity crisis,” still aligning with the characteristics of a long-term store of value while increasingly behaving like a risk asset. This conflict became apparent during the crypto flash crash in October, when forced liquidations intensified selling pressure.
While often referred to as “digital gold,” bitcoin has not kept pace with the recent rise in precious metals, Vafi noted. As gold has increased in value due to geopolitical strains and macroeconomic uncertainty, bitcoin has lagged, highlighting its ongoing reliance on liquidity and risk appetite rather than being viewed as a safe-haven asset.
Strategy is structured to withstand market volatility, according to the report. The company possesses over $44 billion in bitcoin against approximately $8 billion in convertible debt, which includes a $1 billion tranche due in 2027 that remains valuable. Preferred dividends are manageable through limited share issuance, even though MSTR’s market capitalization no longer commands a significant premium relative to its BTC holdings.
Quarterly earnings are anticipated this week; however, they have become largely inconsequential given Strategy’s almost total reliance on BTC, Vafi remarked. A considerable unrealized loss associated with bitcoin’s fourth-quarter decline is expected.
Vafi’s new $185 target presumes a 20% recovery in bitcoin prices and a rebound in the company’s mNAV to approximately 1.25x.
Read more: ETF that capitalizes on turmoil in bitcoin-holder Strategy reaches record high
