Latest news with #GusGala
Globe and Mail
07-04-2025
- Business
- Globe and Mail
MicroStrategy Stock Just Got Its First Bear, and This Analyst Is Calling for 20% Downside. Should You Sell MSTR Now?
After a stellar run over the past two years, Bitcoin (BTCUSD) prices have swung significantly lower in 2025. This drawdown has dragged shares of MicroStrategy (MSTR), the largest corporate Bitcoin holder, lower in recent months. Valued at a market capitalization of $75.6 billion, MSTR stock is down more than 50% from its all-time highs. Let's see if MSTR stock can stage a comeback in 2025 and recover investor gains. This Analyst Is Bearish on MicroStrategy Stock Monness Crespi Hardt analyst Gus Gala has downgraded MicroStrategy to 'Sell' with a $220 price target. This suggests downside of nearly 20% from current levels. In the last week of March, MicroStrategy purchased 22,048 BTC for $1.92 billion. It now holds 525,185 BTC, worth roughly $40 billion. Gala expressed concerns about the market's lukewarm reaction to recent debt and stock sales meant to finance Bitcoin purchases. With the market appearing saturated, Gala warns it's becoming more expensive for MicroStrategy to raise funds. Meanwhile, competitors like Mara Holdings (MARA) and GameStop (GME) are also planning capital raises for Bitcoin acquisitions, potentially challenging MicroStrategy's roadmap. Is MSTR Stock a Good Buy Right Now? Earlier this year, MicroStrategy announced a significant rebranding and changed its name to 'Strategy.' It continued to buy up BTC in the fourth quarter and early in 2025. 'Q4 was the most successful quarter of adding Bitcoin on our balance sheet since the adoption of our Bitcoin strategic reserve,' said CFO Andrew Kang. Strategy confirmed that all its Bitcoin holdings remain fully unencumbered. Strategy has accelerated its previously announced '21/21 plan' to raise $42 billion, split between equity and debt. According to company executives, it has already raised 80% of its $21 billion equity target and 17% of its fixed income target, with plans to shift focus toward more fixed income issuances in 2025. 'The pace of our capital-raising and Bitcoin acquisition significantly accelerated in Q4 2024, during which we raised $15 billion through equity issuances and $3 billion via convertible debt in just under two months,' said CEO Phong Le. MicroStrategy introduced a new convertible preferred stock called 'Strike' (STRK), raising $584 million through its issuance. The perpetual preferred stock offers an 8% fixed dividend and targets investors seeking Bitcoin exposure with lower volatility. Meanwhile, Strategy reported revenue of nearly $121 million in Q4, down 3% year-over-year. However, subscription service revenues increased 48% year-over-year. What Is the Target Price for Strategy Stock? Strategy's stock price is tied to the performance of Bitcoin. So, if you are bullish on the world's largest cryptocurrency, gaining exposure to MSTR stock makes sense. Out of the 12 analysts covering MSTR stock, 10 recommend 'Strong Buy,' one recommends 'Moderate Buy,' and one now recommends 'Strong Sell.' The average target price for the cryptocurrency stock is $513.67, indicating an upside potential of more than 90% from current levels.
Yahoo
01-04-2025
- Business
- Yahoo
Risk to Bitcoin Buying Plans Makes Strategy a Sell, Says Wall Street Analyst
Although Strategy's (MSTR) aggressive buying of bitcoin (BTC) has sent its shares soaring over 2,500% over the past five years, one analyst argues that the reverse could soon be the case. 'While we were negative on several respects upon initiation, we have gained incremental confidence that the convertible issuance strategy is likely tapped,' wrote Monness Crespi analyst Gus Gala, downgrading MSTR to sell just two weeks after initiating coverage at neutral. Strategy currently holds 528,185 BTC on its balance sheet and has been buying sizable quantities nearly every week for the past few months, mostly funded by common share issuance and also sales of its initial preferred series STRK. Gala's price target of $220 suggests just shy of 30% downside from the current price in the $300 area. Gala argued that it will become increasingly more difficult for Strategy to raise money to buy bitcoin via share issuance, forcing the company to shift towards fixed income vehicles. 'If fixed income securities do not become a greater portion of issuance, the BTC treasury strategy will look increasingly challenged.' Gala noted that MSTR has already used $18.6 billion of its $21 billion common share at-the-market offering. The company also raised another $711 million last week via STRF, its second series of preferred stock.
