TLDR

  • Strategy (MSTR) shares rose 9.2% to $134.34 on Friday, coinciding with Bitcoin’s climb toward the $70,000 mark after milder U.S. inflation figures revealed the CPI had fallen to 2.4%.
  • The firm has no intention of selling its Bitcoin holdings and intends to finance future acquisitions via perpetual preferred shares (ticker STRC) rather than diluting common stock; it accounted for 97.5% of all corporate Bitcoin buys in January.
  • Strategy reported a significant Q4 GAAP loss of $42.93 per share, fueled by mark-to-market adjustments on its Bitcoin holdings, which missed analysts’ expected gain of $46.02 by $88.95.
  • Analysts continue to assign a “Moderate Buy” rating to the stock, with an average price target of $374.14—though projections span from $340 to $1,000, contingent on Bitcoin’s price movements.
  • The weekly Relative Strength Index (RSI) dipped below 30 in week 66, mirroring the technical signal that marked the prior cycle’s low when MSTR traded at far lower levels.

Strategy shares climbed 9.2% to $134.34 during Friday’s trading session as Bitcoin advanced toward the $70,000 threshold. This rally followed U.S. inflation data showing the CPI had dropped to 2.4%, its lowest point in four years.

MSTR Stock Card

Trading volume reached 14.29 million shares, a 43% decrease from the average daily volume of 25.2 million. The stock closed at $123.00 the previous day.

The milder inflation report triggered a broader rally across risk assets. Monthly consumer prices rose by just 0.2%, easing concerns about persistent inflationary pressures. Markets interpreted the data as supporting potential Federal Reserve rate cuts in the near term.

Bitcoin-related stocks moved upward in sync: Coinbase rose by 16.5%, Marathon Digital gained 9%, and Riot Platforms added 7%. This aligned movement underscored the tight correlation between Bitcoin’s price action and firms tied to the cryptocurrency sector.

Strategy currently holds Bitcoin assets valued at billions on its balance sheet. Per data-driven reports, it made up approximately 97.5% of all corporate Bitcoin purchases in January— a dominant position that has made its stock highly sensitive to Bitcoin price swings.

Executive Chairman Michael Saylor reiterated that the company will not dispose of its Bitcoin holdings. Management plans to continue purchasing Bitcoin through a new funding mechanism that shifts away from common stock issuance.

Funding Strategy Shifts to Preferred Shares

Strategy announced it will finance future Bitcoin buys via perpetual preferred shares traded under the ticker STRC. These securities offer high variable dividends designed to attract yield-focused investors.

This move reduces dilution risk for common shareholders. However, it alters the company’s capital structure and introduces a new investor base with distinct return expectations.

Certain analysts view the preferred share strategy as a way to stabilize fundraising without repeatedly tapping equity markets. Others raised concerns about the high dividend costs and how preferred shareholders might react during Bitcoin downturns.

Several outlets reported the stock initially fell when the company emphasized this transition to preferred shares. Investors worried about liquidity constraints and the impact of high preferred yields on the overall capital structure.

Despite these concerns, Zacks Research upgraded Strategy to a “Strong Buy” rating on Tuesday. The firm cited oversold conditions and recent Bitcoin-per-share accumulation as bullish catalysts. H.C. Wainwright also highlighted steady Bitcoin-per-share growth as supporting the company’s valuation.

Q4 Results Show Mark-to-Market Losses

Strategy reported Q4 earnings on February 5, posting a loss of $42.93 per share. The firm missed analysts’ expected gain of $46.02 by $88.95. Revenue totaled $122.99 million, a 1.9% year-over-year increase and slightly above the $117.42 million estimate.

The large loss stemmed from mark-to-market Bitcoin writedowns under GAAP accounting rules. The company recorded a negative net margin of 806.34% and a negative return on equity of 8.74%. These accounting losses do not reflect actual Bitcoin sales but demonstrate the stock’s leverage to short-term Bitcoin volatility.

Short-seller Jim Chanos and other critics have targeted the company’s governance and messaging around its Bitcoin strategy. A Seeking Alpha analyst downgraded the stock, citing concerns about the preferred share structure and management’s promotional tone.

BTIG Research set a $250 price target with a Buy rating in early February. Canaccord Genuity established a $185 target, also with a Buy rating. The consensus among analysts is a “Moderate Buy” with an average price target of $374.14.

Technical analysts offered varying predictions for the stock’s upside potential. One analyst suggested MSTR could reach all-time highs and potentially $1,000 if Bitcoin maintains its current bullish trend, echoing patterns from 2021-2022. Another outlined a more conservative price target around $340 based on wave patterns.

The weekly Relative Strength Index fell below 30 last week in the 66th week of the current cycle. In the previous cycle, MSTR bottomed when its weekly RSI dropped below 30 after 65 weeks—raising questions about whether a cycle bottom is forming now.

Director Jane Dietze purchased 1,000 shares at $99.48 on January 20, increasing her position by 38.46% to 3,600 shares. Institutional investors hold 59.84% of the stock, with several funds adding positions during the second quarter.

Bitcoin traded at $69,789 at press time, up 1.13% over the past day. Some analysts identified an “Adam and Eve” pattern forming in Bitcoin’s chart, which traders consider a bullish formation. A move above $72,000 could open the path toward $80,000.