Citigroup Initiates Coverage on Strategy with High-Risk Rating

According to PANews, Citigroup has initiated coverage on Strategy (MSTR) with a buy/high-risk rating and a target price of $485, positioning the stock as a leveraged bet on Bitcoin. On Tuesday, MSTR shares rose by 1.5% in early U.S. trading, reaching approximately $301. In a report released on Tuesday, Citigroup stated that the target price reflects its forecast that Bitcoin will reach $181,000 in 12 months, representing a 63% increase from current levels, along with a 25% to 35% net asset value (NAV) premium. This aligns with Strategy's historical Bitcoin return multiples of 2.5 to 3.5 times. Citigroup analysts believe this structure makes the stock a magnified bet on Bitcoin's performance, offering significant upside potential in a bull market, but also posing a risk of substantial decline if prices reverse. Citigroup noted that in the most pessimistic scenario, if Bitcoin falls by 25% and the NAV premium shifts to a 10% discount, the stock could lose approximately 61%. The report indicates that Strategy plans to continue issuing convertible bonds, preferred stock, and shares based on NAV premium conditions to expand its Bitcoin holdings.