Key Takeaways
- Strategy stock fell 10.9% in the past week (through Monday’s close), most of it on Friday, after MSCI adopted a rule that could drop it from its global indexes.
- Index funds don’t have to sell much stock, but losing them as buyers squeezes the premium Strategy relies on to sell stock and buy more bitcoin.
- Strategy is buying very little bitcoin while spending more than $190 million a week buying back its STRC preferred stock, and its board just added $1 billion to that program.
- Cantor Fitzgerald’s $208 target depends mostly on bitcoin reaching $112,000, and MSCI’s Nov. 11 list is the next big test.
Strategy (MSTR) stock fell 10.9% in the past week (through Monday’s close), while the S&P 500 slipped 1.5%. Almost all of the drop came in one session, after MSCI (MSCI) changed who gets into its indexes.
MSCI did nearly all the damage
On the evening of Thursday, Oct. 15, MSCI said non-operating companies will no longer qualify for its Global Investable Market Indexes. Strategy fell 9.6% the next day, even though bitcoin traded about 2% higher that morning. (A 2.14% drop in the Nasdaq Composite didn’t help.)
MSCI names the affected companies on Nov. 11, and the change takes effect at the Nov. 30 close. A company already in the index, like Strategy, is removed only after failing MSCI’s tests in two straight annual filing periods.
The premium takes the real hit
By Strategy’s count, index funds tracking MSCI own about 13 million shares, which is less than a day’s trading volume. CEO Phong Le called exclusion “really immaterial to us” in August, and on the forced selling, he’s probably right.
But Strategy grows its bitcoin per share by selling stock for more than its bitcoin is worth, and Le put that multiple near 1.07x in August. Once index funds stop being steady buyers, that thin cushion gets harder to rebuild.
Selling stock has been the engine: Strategy’s diluted share count nearly tripled from fiscal 2021 to fiscal 2025…
…and the engine has already slowed to a crawl. In the week to Oct. 11, Strategy sold just $21 million of common stock to buy 250 bitcoin. In the first quarter it bought about 89,599. That same week it spent $192.4 million buying back its STRC preferred stock, then $193.1 million the next week, when it bought just 267 bitcoin. On Monday, its board added $1 billion to that buyback program.
Cantor’s upside is a bitcoin call
Cantor Fitzgerald kept its Overweight rating on Friday morning and raised its target to $208 from $186, 53% above Monday’s close. Most of that target comes from bitcoin: Cantor raised its 12-month bitcoin assumption to $112,000 from $98,000, about a third above what Strategy paid last week.
The Street’s mean target rose from $225 on Sept. 1 to $239 on Oct. 16 as the stock slid.
Next up: a shareholder vote on daily preferred dividends on Oct. 28, third-quarter results after the close on Oct. 29, then MSCI’s list.
My take: Cantor’s 53% is a bet that bitcoin reaches $112,000. Until Nov. 11, I wouldn’t count on the premium adding anything on top, so Strategy only makes sense here if you’d happily own bitcoin with leverage. Of course, if Strategy survives the list with its multiple above 1x, it can start selling stock to buy bitcoin again.
So what is Strategy stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
