Bitcoin Giant Strategy Gets a 'Buy' From Citi—With a Warning

Core Viewpoint - Citi has assigned a "buy" rating to Strategy stock with a price target of $485, indicating its potential as a significant indicator of Bitcoin's price movements [1] Group 1: Stock Performance and Valuation - MSTR closed at $301.91 per share, reflecting a 1.7% increase, with a historical peak price of $473.83 in 2024 [2] - Bitcoin is currently priced at $111,490, which is over 11% lower than its all-time high of $126,080 recorded in October [2] - The bank estimates that MSTR's net asset value (NAV) premium could range from 25% to 35%, based on a historical Bitcoin yield multiple of 2.5x to 3.5x, assuming continued positive momentum for Bitcoin [2] Group 2: Company Strategy and Holdings - Strategy, formerly known as MicroStrategy, began acquiring Bitcoin in August 2020 to enhance shareholder returns amid inflationary pressures during the COVID-19 pandemic [3] - The company is now the largest corporate holder of Bitcoin, with a total of 640,418 Bitcoins valued at approximately $71.6 billion [4] - Strategy's business model allows investors to gain exposure to Bitcoin by purchasing its shares, with co-founder Michael Saylor frequently advocating for the asset's potential benefits for corporations [4] Group 3: Risks and Market Context - The bank cautioned that MSTR stock carries significant risks due to its status as a leveraged proxy for Bitcoin, with its value closely tied to the cryptocurrency's volatility [3] - Other companies have adopted a similar strategy of purchasing Bitcoin and other digital currencies to enhance their stock prices, although experts have raised concerns about the risks associated with this approach [4]