Benchmark Analyst Predicts 183% Surge for Strategy Stock Despite BTC Selling Pressure

On December 2nd, the Strategy stock (Nasdaq: MSTR) exhibited varied performance following news that the company might sell its Bitcoin if its market-to-net-asset-value (mNAV) drops below 1x. Despite an initial dip of over 8%, analysts from Benchmark raised their price target for MSTR, suggesting an impressive upside potential.

Key Takeaways

Performance Overview: MSTR stock fell over 8% but rebounded to close at $171.5.
Analyst Confidence: Benchmark analysts raised MSTR's price target to $705, indicating a potential 183% increase.
BTC Implications: Benchmark’s Mark Palmer believes significant BTC price drops are unlikely to occur suddenly.
Reserve Holdings: A $1.44 billion reserve was established by Strategy to aid in covering obligations related to BTC.
Market Predictions: The likelihood of a sell-off of Strategy’s BTC holdings remains low, with current market indicators showing fluctuating probabilities.

On December 2nd, Strategy stock (Nasdaq: MSTR) showcased mixed results. This was in response to the company’s announcement that it would consider selling its Bitcoin holdings if its market-to-net-asset-value (mNAV) fell below 1x. Initially, the stock experienced a decline of over 8%, reaching a low of $149, but it rebounded to finish the Monday session at $171.5.

Despite concerns surrounding the potential sale of Bitcoin and a hefty $8.2 billion in debt obligations, analysts at Benchmark investment bank increased MSTR’s price target to $705. This projection represents a remarkable 183% upside potential.

Mark Palmer, a research analyst at Benchmark, sought to diminish fears regarding MSTR's future, specifically regarding the implications of Bitcoin price fluctuations. He noted that the company would only struggle to cover its $8.2 billion in convertible debt if the price of Bitcoin dropped below $12,700 and remained there. This scenario would necessitate an 86% decrease in Bitcoin's value to jeopardize MSTR significantly, though Palmer believes such a drastic drop is improbable.

"While Bitcoin has faced multiple 80%+ drawdowns throughout its 17-year history, we believe that an event causing such a sharp decline would require several macroeconomic shocks to happen at once," he stated.

In December, Benchmark was the sole firm to issue a strong buy recommendation for MSTR, despite concerns related to potential MSCI exclusions and the correction of Bitcoin prices. Additionally, thirteen other analysts categorized MSTR as a 'moderate buy.'

Strategy Stock Source: Market Beat

Palmer also expressed that the stock’s unique "Bitcoin-linked reflexivity" offers it a torque for gains unrivaled by other equities.

Benchmark Analyst Predicts 183% Surge for Strategy Stock

The Implication of Strategy’s $1.44 Billion Reserve

Strategy additionally announced a reserve of $1.44 billion intended to meet obligations from preferred stocks used to fund Bitcoin purchases. While this reserve has been viewed as a safeguard that allows the firm to avoid selling its Bitcoin, opinions are divided. Some experts claim this reserve, stemming from another loan, could threaten MSTR’s overall stability, potentially dragging Bitcoin and the broader cryptocurrency market down. Notably, financial commentator Peter Schiff labeled it as the "end of MSTR."

Strategy Stock Image Source: X

Will Strategy Choose to Sell Its Bitcoin Holdings?

Contrarily, CryptoQuant analyst Carmelo Aleman does not share Schiff’s pessimistic view. Aleman pointed out that MSTR's current valuation appears undervalued based on its Bitcoin reserves, a trend that previously spurred a market rebound in 2022.

Strategy Stock Overview Source: CryptoQuant

Attention will now pivot to MSTR's mNAV, currently sitting at 1.15x, and the firm’s decision regarding the sale of its 650,000 BTC holdings. According to the prediction platform Polymarket, the likelihood of Strategy selling its Bitcoin by mid-2026 initially surged to over 40% before settling below 30% at the time of this writing. This indicates that while selling is a possibility, it remains unlikely.

Market Probability Chart Source: Polymarket

Conclusion

The developments surrounding Strategy stock reflect the volatile nature of the cryptocurrency market, particularly as it relates to Bitcoin investments. While current projections are optimistic, ongoing monitoring of market conditions will be essential for understanding the potential outcomes for MSTR and its Bitcoin holdings.