Strategy (MSTR.US) stock price plummeted by 60% but still receives support from Wall Street! Analysts bet on Bitcoin rebound.

In order to make Wall Street analysts abandon their usual bullish stance, there must be a highly impactful event. Taking Strategy (MSTR.US) as an example, the company's stock price suffered a sharp drop, plummeting by as much as 60%, and its market value also significantly shrunk, evaporating $73 billion. However, even after such a heavy blow, it is understood that out of the 19 analysts covering the company, only 3 changed their stance to bearish, while the remaining 15 analysts still maintain a "buy" rating. Further focusing on these 15 analysts who gave a "buy" rating, 12 of them provided explicit target prices. The median target price points to around $485, implying more than a 150% increase from the closing price of $189 on Monday. It is worth mentioning that President Capital Management Corp.'s analyst Jeffrey Yu and Cantor Fitzgerald's analyst Brett Knoblauch both predicted that the stock price would fluctuate around $200, with the lowest target price following at $425. On the other hand, Mark Palmer, analyst at Benchmark Co., gave a target price as high as $705, indicating that the stock price could nearly quadruple. This company, which began its business in the software industry, was the first to spark the investment craze in "Bitcoin treasury" in the market. The bullish logic is clear and direct: Bitcoin will rebound strongly from the latest downturn as it did in 2022 and 2017, subsequently driving a significant increase in the value of the cryptocurrency assets held by Strategy. In an interview, Palmer confessed: "For the cryptocurrency sector, a year's time span is like a long era, during which massive transformations can occur." This viewpoint vividly highlights the challenges faced by evaluating "digital asset treasuries" like Strategy. Such analysis does not rely on discounted cash flow calculations or other bottom-up balance sheet derivation methods but purely on a gamble on the price trends of assets known for their violent fluctuations. Therefore, compared to the current stock price, the market's optimism towards Strategy stands out prominently among large U.S. companies. The median target price increase corresponds to the forefront in the Nasdaq 100 index components and ranks first; even in the Russell 1000 index, it only lags behind biotech group Viking Therapeutics Inc. (VKTX.US) and self-driving technology company Aurora Innovation Inc. (AUR.US), with the average gap between the current stock price and analyst's median target price in the Russell 1000 index components being only 17%. It is worth mentioning that Strategy's highest target price is nearly four times the lowest target price. The bullish camp can also list Strategy's brilliant achievements since Michael Saylor's strategic shift to the cryptocurrency field. In six short months after announcing the purchase of Bitcoin in August 2020, the company's stock price skyrocketed by over 600%. At that time, the enthusiasm from investors for the company's stocks even surpassed that of Bitcoin itself - as the price of the cryptocurrency did not reach its historical peak of $126,000 until October this year. In this process, the premium given to the company's stocks by investors once exceeded 2.5 times the price of Bitcoin. However, in a sense, Strategy has become a "sacrificial lamb" of its own brilliant achievements: with numerous imitators launching new digital asset treasury (DAT) products, the demand originally channeled through listed companies to acquire exposure to cryptocurrency assets has been significantly diverted. Now, Strategy's stock price premium has greatly shrunk, equivalent to only 1.2 times the value of Bitcoin. In April this year, Gus Gala, financial technology and cryptocurrency analyst at Monness, Crespi, Hardt & Co., downgraded Strategy's rating to "sell," with intense market competition being one of the key factors in his decision. He predicted that the company would struggle to be included in the S&P 500 index components and would not receive an investment-grade rating from S&P Global Ratings - in fact, the latter downgraded its rating to B- junk status in October. However, after Strategy's stock price plummeted, Gus Gala upgraded the company's rating to "neutral" in November. Gala pointed out: "From an economic perspective, there is a strong motivation for companies to continue issuing stocks, conducting financing activities, or underwriting operations. However, market demand is ultimately objective, and I think this is the cause behind the current situation you see." Nevertheless, Gala does not completely rule out the possibility of Strategy's stock price premium expanding significantly again. He stated: "Will the stock price premium return to double levels? At some point in the future, especially as the next market cycle peak approaches, this possibility exists. But can this high premium state be sustained for a long time? I personally believe it's unlikely." While other analysts have lowered the stock's target price, they still maintain an optimistic attitude towards it: Bernstein lowered its target price by 25% on Monday, while Cantor Fitzgerald also significantly reduced its target price by 59% last week. However, both companies predict that the stock price will rise from its current level within the next 12 months. Palmer predicts that by the end of 2026, the price of Bitcoin will skyrocket, rising by over 140% to a high of $225,000, and buoyed by this positive news, Strategy's stock price will also rise. He also estimates that the market performance of newly launched digital asset treasury (DAT) products will not be satisfactory, further fueling demand for Strategy's stock in the market. Palmer admitted: "Our optimism towards Strategy is largely based on our firm belief in the strong upward potential of Bitcoin's price." As of writing, the price of Bitcoin is $92,188.59 per coin.