Strategy’s Equity Shift Is No Retreat From Bitcoin Strategy, Benchmark Says

Strategy’s (MSTR) recent share-price weakness has drawn criticism from retail investors who accuse executive Executive Chairman Michael Saylor of undermining discipline by loosening a self-imposed rule against issuing equity when the company’s premium to its bitcoin holdings (mNAV) fell below 2.5x.

That criticism, however, misreads the situation, Benchmark analyst Mark Palmer said in a research report Tuesday.

The stock’s underperformance has more to do with market dynamics, namely a compressing premium to its bitcoin net asset value and broader volatility in crypto and macro markets, than with capital mismanagement, Palmer wrote.

By updating its guidance on Aug. 18 to allow tactical equity issuance even below the 2.5x mNAV threshold, Strategy effectively restored flexibility, the analyst said. Rather than a capricious move, the change freed the company to keep buying bitcoin during periods of weakness, maintaining its accumulation flywheel.

This approach is consistent with its history of adapting its balance sheet, Palmer argued, whether paying down restrictive debt, refinancing with convertible bonds, or innovating with perpetual preferred stock designed to supply permanent capital without refinancing risk.

That financial innovation has been one of Strategy’s most overlooked strengths., according to Palmer. Its preferred stock program has created new bitcoin-linked instruments attractive to hedge funds and volatility traders, validating the firm’s strategy and expanding the investor base. Each successful placement underscores the appetite for bitcoin-tied fixed income and cements the company’s reputation as a credible issuer experimenting at the intersection of crypto and traditional markets.

The company may soon face another milestone: potential inclusion in the S&P 500 index. If admitted, the stock could see billions in passive inflows and would join Coinbase (COIN) and Block (XYZ) in embedding crypto exposure directly into the portfolios of mainstream equity investors, the broker said.

Palmer reiterated its buy rating and $705 price target, calling Strategy the most liquid and direct vehicle for exposure to bitcoin’s upside without mining risk. That would be more than a double from the current share price of $332.

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