Benchmark Remains Confident Despite Stock Drop and Potential Bitcoin Sale
Benchmark has expressed confidence in the performance of Strategy Corp, despite a significant drop in its stock this year. Concerns have emerged regarding the company potentially needing to sell its Bitcoin holdings, but Benchmark’s analysts assert that such fears are unfounded.
Stock Performance and Analyst Insights
Strategy Corp, previously known as MicroStrategy, has experienced a 43% decrease in stock value year-to-date. Closing at $171.24 on Monday, its decline mirrors the fall of Bitcoin, which is currently valued at approximately $85,779. This represents a drop of over 30% from its October peak of $126,080, according to CoinGecko.
Investment bank Benchmark has reaffirmed a “buy” rating for Strategy Corp. Analyst Mark Palmer indicated that misconceptions about the company’s financial stability have fueled skepticism. He emphasized that the company would not face significant trouble unless Bitcoin price plummets below $12,700 for an extended period. Palmer noted that covering the company’s outstanding convertible debt of roughly $8.2 billion would be untenable under such circumstances.
- Current Bitcoin price: $85,779
- October 2023 Bitcoin peak: $126,080
- Strategy Corp’s stock decline: 43% year-to-date
- Convertible debt: ~$8.2 billion
Future Projections and Market Strategies
Benchmark continues to project a price target of $705 for Strategy Corp’s stock, predicting that Bitcoin could reach $225,000 by the end of 2026. Mark Palmer described the company’s stock as a powerful vehicle for exposure to crypto markets, thanks to its distinctive financial structure and capital-raising capabilities.
Initially, Strategy began its Bitcoin acquisition strategy in 2020, leading to a cumulative investment of approximately $48.3 billion. As of now, the company holds an impressive 650,000 BTC, amounting to roughly $55.2 billion at current rates, marking it as the largest corporate holder of Bitcoin.
Investor Sentiment
Investor confidence in Bitcoin remains relatively robust, with 54% of participants in a Myriad prediction market anticipating that Bitcoin could surge to $100,000. Meanwhile, the remaining participants project a decline to around $69,000.
Moreover, on Monday, Strategy announced the establishment of a $1.44 billion U.S. dollar reserve aimed at providing consistent dividends, even during periods of Bitcoin depreciation. The potential for selling cryptocurrency was also mentioned, reflecting strategy adaptability.
In summary, Benchmark remains positive about Strategy Corp, seeing it as a viable option for those looking to invest in the crypto space, despite current market volatility and stock fluctuations.
