Analysts See Strategy's Bitcoin Premium Decline
Date: 2025-11-03 Author: Henry Casey Categories: BUSINESS
Wall Street financial experts from Cantor Fitzgerald LP, TD Cowen, and Maxim Group LLC have revised their forecasts for Strategy, citing a narrowing Bitcoin premium—a key metric for determining the stock's attractiveness. The average price target for the company's shares has fallen to its lowest level since May 2025, despite impressive quarterly profit.
In its third quarter, Strategy (formerly MicroStrategy), led by Michael Saylor, reported net profit of $2.8 billion, exceeding market expectations. However, investors and analysts have expressed doubts about the sustainability of these figures, as the company's growth is largely dependent on Bitcoin dynamics.
The main source of concern has been the narrowing of the Bitcoin premium—the difference between Strategy's market value and the value of its Bitcoin portfolio. As TD Cowen analyst Lance Vitanza noted, Bitcoin's growth rate slowed at the beginning of the fourth quarter, leading to a decline in the premium and weakening the company's profitability. He noted that current profitability is now measured in basis points rather than percentages, reflecting the decline in capital markets activity.
Since Strategy completely changed its strategic focus in 2020 and invested the majority of its capital in Bitcoin, the company's shares have come to be viewed as a derivative of the crypto asset's value. The Market-to-Net Asset Value (mNAV), which previously reached double digits, has now fallen to 1.3.
Cantor Fitzgerald analyst Brett Knoblauch emphasized that the decline in the mNAV premium reduces Strategy's profit potential and negatively impacts the company's valuation. He noted that Bitcoin must rise to $150,000 to meet his $20 billion operating income forecast by the end of 2025.
Despite the negative forecast revisions, Strategy shares rose 7% on October 31, demonstrating short-term investor confidence. However, their price remains more than 40% below their all-time peak in November 2024.
Nevertheless, Cantor Fitzgerald, TD Cowen, and Maxim Group maintained their "buy" ratings on the company's shares, expecting a medium-term recovery if Bitcoin rises.
Earlier, S&P Global Ratings assigned Strategy a B- credit rating, describing the company's business model as risky due to limited dollar liquidity. At the same time, analysts at 10x Research estimate Strategy's chances of being included in the S&P 500 index at 60-70% if the company demonstrates strong financial results in the coming quarters.
