What Happened?
Shares of bitcoin development company Strategy (NASDAQ: MSTR) jumped 3.4% in the afternoon session after the price of Bitcoin rose and investment bank Benchmark reaffirmed its 'Buy' rating on the company.
The global cryptocurrency market cap saw an increase, with Bitcoin gaining 1.52% to trade around $89,168. This move positively impacted MicroStrategy, whose corporate strategy is heavily linked to its large Bitcoin holdings. Adding to the bullish sentiment, investment bank Benchmark reiterated its confidence in the company's long-term plan by maintaining a 'Buy' rating and a $705 price target for 2026. The bank's positive view centered on the company's massive exposure to Bitcoin. This rebound came after a period of significant decline for the stock, which had fallen nearly 58% in the preceding three months.
After the initial pop the shares cooled down to $157.56, up 3.7% from previous close.
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What Is The Market Telling Us
Strategy’s shares are extremely volatile and have had 57 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock dropped 4.4% on the news that the company paused its long-standing Bitcoin purchasing strategy to build cash reserves while Citigroup significantly lowered its price target on the stock.
Strategy sold 4.5 million shares, raising nearly $748 million and boosting its cash holdings to $2.19 billion. This move to suspend Bitcoin purchases was interpreted by observers as a defensive shift, suggesting the company was preparing for a potential downturn in the cryptocurrency market. Adding to the pressure, a Citigroup analyst cut the firm's price target on the stock by nearly 33% to $325 from $485, although the "Buy" rating was maintained. The company's stock, which is closely linked to the value of Bitcoin, also faced headwinds as the cryptocurrency's price slid. This development followed a recent decision by MSCI not to add Strategy to a key index, which also weighed on the stock.
Investors who bought $1,000 worth of Strategy’s shares 5 years ago would now be looking at an investment worth $3,705.
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