TD Cowen sees dilution risk for Strategy shareholders despite bullish bitcoin outlook
Strategic trade-offs limit shareholder gains
TD Cowen raised its bitcoin price forecast but kept its $260 price target on Strategy (MSTR) unchanged, warning that the company's share dilution and financial obligations will likely cap the upside for common shareholders even if bitcoin climbs.
Analysts Lance Vitanza and Jonnathan Navarrete maintained a Buy rating on the stock. They argued that higher bitcoin prices should help boost Strategy's earnings potential. However, the company's preferred-stock repurchases and cash reserve building could eat into those gains for MSTR holders.
"Capital structure expansion and associated dilution temper the per-share benefit," the analysts wrote in their Thursday report.
Key numbers from the report
- TD Cowen's $260 target implies roughly 73% upside from Strategy's recent price near $150.
- Strategy holds 848,000 BTC with approximately $4.5 billion in unrealized profits.
- The stock has fallen about 2.5% in recent trading and is down nearly 5% year to date.
- BTC is trading near $81,300, down 9% year to date.
What the analysts say
TD Cowen's updated model forecasts bitcoin near $109,000 by the end of 2026 and $280,000 by 2029. That outlook is more optimistic than QCP Capital's fourth-quarter base case, which places bitcoin between $80,000 and $90,000.
The analysts noted that buying more bitcoin does not automatically translate into larger gains for common MSTR shareholders. Investors need to account for the company's debt and preferred shares, including STRC, STRF, and STRD, whose holders have priority claims over common shareholders.
After factoring in those claims, "bitcoin ownership per MSTR share has been less robust," TD Cowen said.
Strategy is also using some of its raised capital to build cash reserves and support its suite of preferred shares rather than immediately buying bitcoin. That approach could help attract investors and fund future purchases, but it leaves less money available for bitcoin buys today.
Valuation recovery follows summer slump
Strategy's stock has recovered from a low near $100 in late June through mid-August. Its valuation has returned to roughly one times its net asset value, up from a low of 0.63 in June, according to Saylor Tracker. The company's bitcoin holdings now carry roughly $4.5 billion in unrealized profits.
What is confirmed
TD Cowen maintains its $260 price target and Buy rating on Strategy. The firm raised its bitcoin forecasts to $109,000 by end of 2026 and $280,000 by 2029. Strategy holds 848,000 BTC. The company has preferred shares (STRC, STRF, STRD) that rank ahead of common shares. Bitcoin is trading near $81,300.
What is still unclear
TD Cowen's bitcoin year-end forecast of $109,000 differs from QCP Capital's $80,000 to $90,000 base case. It is not clear which forecast will prove more accurate.
Why this matters
Strategy is one of the largest publicly traded holders of bitcoin. Its stock is often watched as a proxy for bitcoin exposure, but this report highlights that owning the stock is not the same as owning bitcoin directly. Dilution from share issuance and claims from preferred shareholders can reduce the per-share benefit even as the company's bitcoin holdings grow.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.