After a 40% Plunge Still Expected to Rise 170%: Why is Wall Street So "Devoted" to Strategy (MSTR.US)?

According to Zhitong Finance APP, Michael Saylor-led Strategy Inc. (MSTR.US) is currently facing an almost complete collapse of confidence—except for the unwavering stance of Wall Street analysts.

Even though analysts have cut their target prices as Strategy's common and preferred shares have plunged alongside bitcoin, they still see more upside potential for the stock than any other Nasdaq 100 component. Not even Elon Musk’s SpaceX (SPCX.US) is an exception—the stock has dropped below its IPO issue price after a record-breaking debut.

According to compiled data, 17 analysts have rated Strategy as “Buy” or equivalent, including those from TD Cowen, Citi, and B. Riley Securities. In comparison, there are three “Hold” ratings and only one “Sell.”

This optimistic outlook comes as Strategy is in the midst of fundamentally transforming its core business model. Saylor has repositioned the company from a little-known enterprise software maker into the world’s largest publicly listed holder of bitcoin. After years of urging investors to buy into cryptocurrency, the company has begun selling portions of its holdings to raise cash. By the end of June, Strategy had moved away from a “buy and hold” strategy towards actively managing its liquidity and balance sheet. These changes are aimed at strengthening its ability to meet future debt obligations but have so far failed to restore market confidence. The company’s securities have yet to recover lost ground.

Nevertheless, Wall Street analysts have broadly stuck to their bullish calls. Their forecasts partly rest on the expectation that Saylor’s financing machine can continue to raise funds and that a bitcoin rebound will return the stock to the premium investors once assigned it.

TD Cowen analyst Lance Vitanza said his view on Strategy depends on his expectations for bitcoin’s performance in the years ahead.

In an interview, he said: “I am highly confident that in two years, five years, bitcoin will be in the hundreds of thousands of dollars—but it won’t be a straight, smooth, or gentle ride.”

On Thursday, bitcoin traded around $66,000, nearly half of its record high at the end of last year. Strategy’s share price closed at around $100 on Wednesday.

Strategy did not respond to a request for comment.

The consensus one-year target price is around $275, implying an upside of about 170% from current levels. According to compiled data, this is nearly twice the expected rise for SpaceX, which holds the second most bullish target price in the Nasdaq 100. Such a massive implied upside has raised skepticism.

Adam McCarthy, head of research at crypto liquidity and market data firm LO:TECH, said such projected gains are “far beyond reality and appear highly unreasonable.”

This consensus target price figure comes with a significant caveat. It reflects recommendations made at various stages during Strategy’s decline. Some firms have updated their views in recent weeks, while others have gone months without adjusting their ratings or target prices—some even dating back to the end of 2025.

The enormous implied upside may also partially reflect the rapid drop in Strategy’s share price. The stock has fallen over 40% in the past three months, making it the worst performer in the Nasdaq 100. Because analysts adjust target prices less frequently than market repricing occurs, sudden selloffs can create a large gap between consensus expectations and the current market price.

Still, analysts have lowered their expectations. Compiled data shows the average target price has dropped from over $460 at the start of the year, with many firms cutting their bitcoin forecasts and valuation assumptions. But most analysts remain reluctant to abandon their “Buy” or equivalent ratings.

Recent research reports remain broadly positive. Of the 11 analysts who have updated their views, nine rate Strategy as “Buy” or equivalent, one is neutral, and one recommends shorting the stock. While recent Buy ratings mask major valuation disagreements—the target prices range from $130 to over $500—they all point to a consistently bullish sentiment.

Some analyst firms covering Strategy have commercial relationships with the company, including underwriting securities offerings, making a market in its securities, and serving as authorized agents for its at-the-market issuance program.

Earlier this year, Saylor said about 80% of Stretch preferred shares had been sold to retail investors through the at-the-market program. He has said he hopes these securities become Strategy’s main funding source. If retail investors remain the primary buyers, the company’s ability to continue raising funds through the program will largely depend on the continued willingness of retail investors to purchase these preferred shares.

McCarthy said: “If you value it like a bank analyst might, you may believe retail money flows are resilient, and if rates come down next year, bitcoin might even make a comeback.”