Investment bank TD Cowen has slashed its price target for Strategy (MSTR) from $440 to $350, a 20.5% cut, while keeping a Buy rating. The firm also initiated coverage on four smaller crypto reserve companies, all with Buy ratings.
Why the Target Cut: Bitcoin Price Outlook and Valuation Multiple Reduced
Analysts Lance Vitanza and Jonathan Navarrete said the downgrade reflects lower expectations for both Bitcoin's price and the valuation multiple applied to Strategy's BTC gains. They estimate Strategy's Bitcoin gain for fiscal 2026 at $7.87 billion, down from $10.17 billion in 2025. Still, they see the core business model—using leverage to turn market volatility into Bitcoin accumulation—as sound. Strategy currently has net debt of $5.94 billion, a market cap of $41.88 billion, and holds 766,970 BTC at an average cost of $75,700.
Three Scenarios: From $175,000 to $25,000
TD Cowen modeled three scenarios: Base case sees BTC hitting $140,000 by December, with Strategy buying ~$5 billion in BTC per quarter. Bull case assumes BTC surges to $175,000 (40% above prior all-time high), with quarterly purchases exceeding $5 billion. Bear case imagines BTC crashing 80% to $25,000, forcing Strategy to halt buying. Risks include correlation to BTC, premium compression, regulatory changes, and custody issues (e.g., cold wallet key loss).
Four New Names: From ETH Staking to Reverse Split
TD Cowen believes public Bitcoin and Ether reserve companies create value for investors and the underlying ecosystem, and that the sector is "likely to persist and attract more attention." The four firms:
Sharplink (SBET) price target $16. It positions as an institutional-grade Ether reserve platform, accumulating ETH and staking to generate yield above spot ETFs. If ETH reaches $3,650 by end-2026, potential 2026 Ether gain could hit $93 million.
Strive (ASST) target $26. Assuming BTC at $140,000 by year-end and a 2x valuation multiple, Strive could generate ~$142 million in Bitcoin gain in fiscal 2026.
Nakamoto Holdings (NAKA) target $1. Founded by David Bailey in May 2025, it holds minority stakes in overseas Bitcoin reserve firms, with estimated $394 million gain in fiscal 2026. To maintain Nasdaq listing, it has proposed a reverse stock split of 1:20 to 1:50.
The Smarter Web Company (SWC.LN) target £1 (~$1.34). It moved to the London Stock Exchange in February, raising £225 million in the first six months. It runs a dual-track model: maintaining its web design and marketing business while using capital markets to accumulate Bitcoin. The target assumes BTC at £106,000 ($140,000) by end-2026.
Risk Factors: Volatility, Regulation, Funding Access
Common risks include crypto price swings, political/regulatory uncertainty, financial leverage, and capital market access. Specific risks: Sharplink depends on Ether's price surge; Strive needs to regain value-accretive capital access; Nakamoto has a $210 million Kraken loan due in December 2026; Smarter Web has only a $30 million Coinbase credit line, limiting liquidity.