Strategy shares fell more than 8% to $84.68 after the company unveiled a new capital framework, even as Benchmark reiterated its Buy rating and held its $570 price target. Based on Monday’s close, that target implies roughly 515% upside.
New framework adds buyback and liquidity options
Benchmark said the revised framework gives management more flexibility across both sides of the capital structure. That includes tools for security repurchases, handling preferred share obligations, and raising cash from Bitcoin holdings during periods of market stress. Analyst Mark Palmer said the company can now manage both sides of its capital structure more actively, which he described as a significant positive for shareholders.
The plan includes a $2.55 billion reserve, equal to about 17.4 months of dividend coverage. It also authorizes a $1 billion common stock repurchase program and a separate $1 billion buyback authorization for preferred securities, including STRC, STRF, STRD, and STRK.
Board approves up to $1.25 billion in Bitcoin sales
Strategy’s board also approved the sale of up to $1.25 billion worth of Bitcoin from the company treasury, which holds 847,363 BTC. Benchmark said that amount is modest relative to the firm’s total Bitcoin reserves, suggesting concerns about aggressive Bitcoin selling may be overstated.
The new structure also allows the company to pause common stock offerings when shares are no longer trading at a premium to net asset value. Management is also allowed to buy back both common stock and preferred securities when it sees a value-creating opportunity.
Other firms keep buy ratings but cut targets
TD Cowen reaffirmed its Buy rating but cut its target on Strategy from $400 to $260. The firm tied that change to lower Bitcoin price expectations rather than the new capital framework itself. Canaccord Genuity also maintained a Buy rating while lowering its 12-month target from $163 to $130.
Canaccord said pressure on the stock is coming from continued Bitcoin volatility, risks embedded in Strategy’s capital structure, and investor concern over its funding model. The firm also said Strategy’s Bitcoin accumulation model works efficiently in a forward-moving market, but performance weakens when the trend reverses.
Bitcoin weakness and preferred share stress remain in focus
Strategy introduced the new framework after MSTR dropped roughly 30% over the previous week. At one stage, the company’s market capitalization fell below the total value of its Bitcoin holdings, adding to investor concern. Preferred shares are also being watched closely. STRC, which ranks above common stock in the capital structure and is generally expected to trade near $100, recently fell below $80.
Questions remain over how future dividend liabilities tied to these securities will be funded, keeping dilution concerns alive. Strategy’s trading remains closely linked to Bitcoin. In the latest market action, Bitcoin was hovering around $58,487, down nearly 20% in June, while MSTR was on track for a roughly 41% monthly decline, its steepest since 2022. After the $540 peak reached in November 2024, both Bitcoin and MSTR have stayed under pressure; since STRC debuted, Bitcoin has lost about 50% and MSTR is down roughly 77%.