Analysts at TD Cowen have spoken out in favor of Strategy’s premium, labeling opposition opinions as “logically flawed.”
Entities criticizing Strategy Inc.’s sky-high valuation have met strong pushback from TD Cowen, which described the argument that the Strategy stock should only trade at the same value of its Bitcoin BTC $118 179 24h volatility: 0.3% Market cap: $2.35 T Vol. 24h: $49.04 B as “logically flawed.”
Analysts from the firm stated that the Michael Saylor outfit’s relentless share issuance under its upsized 42/42 plan has boosted, not diluted, investors’ claim on Bitcoin.
Strategy Directs Cheap Capital Into Bitcoin
According to TD Cowen analysts Lance Vitanza and Jonnathan Navarrete, bears view Strategy’s premium as nothing more than a greater fool theory. These traders struggle to understand the logic behind investing in Strategy.
It is not a prudent endeavor because Bitcoin yield depends entirely on the company’s premium.
“It’s a self-fulfilling recursive loop that could just as easily unwind, they claim. There are many flaws in this argument,” the TD Cowen analysts wrote.
For context, Strategy’s net asset value premium represents the percentage by which its market capitalization exceeds the worth of BTC holdings. Based on The Block’s data dashboard, Strategy’s MSTR currently has an equity value of $124.3 billion, including $72 billion in BTC. This outlook suggests that the coin has a NAV premium of around 72.6%.
TD Cowen highlighted the advantages of leveraging the business intelligence and software firm’s premium. Strategy’s method of using cheap capital to buy Bitcoin and increase coins per share on a fully diluted basis is impressive, but it will be hard for retail investors or competing companies to copy.
Notably, Strategy can easily secure Bitcoin “yield,” and the firm does not even require a market premium in this case. The Michael Saylor-led company can also borrow at a blended rate of 0.421%, which individual investors cannot access, to achieve this feat.
Strategy Strengthens Its Bitcoin Accumulation Move
Meanwhile, Strategy has continued to purchase more Bitcoin to expand its already substantial holdings. Just last week, it offloaded 1,636,373 common shares through its $21 billion at‑the‑market program.
Strategy also sold thousands of its three preferred stock offerings and the proceeds came in at a total of $739.8 million.
A week prior, it had announced a $4.2 billion at-the-market (ATM) share sale as part of its move to expand its Bitcoin holdings further. This was in addition to plans to sell preferred STRD stock over time, with proceeds earmarked primarily for Bitcoin acquisitions and corporate operations.
Saylor noted that the company acquired 69,140 BTC in Q2 alone, which resulted in the firm earning $14 billion in unrealized gains during the same quarter. More recently, Strategy purchased 6,220 Bitcoin for $739.8 million.
As of July 20, Strategy holds a total of 607,770 BTC, acquired for approximately $43.6 billion. The average purchase price per coin is $71,756, compared to Bitcoin’s current trading price of $118,307.
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