Strategy stock ($MSTR) continues to pop, closing up 5.95% at $97.58, with another 0.73% jump to $98.29 in pre-market trading. In an interview with Bloomberg TV, CEO Phong Le explained how Strategy is managing its huge pile of Bitcoin (BTC-USD). Le said his main goal is to shape a financial system “that can withstand bear markets” while still gaining a lot of value when crypto prices go up. This plan has helped increase the price of Strategy’s stock after some tough crypto-related drops over the past year.
Strategy Is Trying to Protect Its Balance Sheet
Right now, Strategy stock investors are tracking the price of Bitcoin, which sits around $64,500. Le explained that Bitcoin would have to drop all the way down to between $8,000 and $10,000 before MSTR stock faces any real financial danger.
Le reassured investors about the safety of their funds with his statement, “Until that point in time, we feel very secure about the balance sheet.” Bitcoin’s price would need to drop 85% to hit that low zone.
If that extreme crash happens, only then will Strategy look more carefully at the risks tied to its corporate loans. Strategy stock is the largest public holder of Bitcoin in the world, so keeping the balance sheet safe is the top goal for management.
MSTR Stock Is Building Up Its Cash Reserves
The preferred shares for Strategy, known as STRC stock, are climbing again after a hard drop. STRC stock fell under $75 in late June, but it has now recovered to around $90. Strategy uses STRC stock to raise the cash it needs to purchase more Bitcoin. When STRC stock drops below its normal $100 value, this low price prevents Strategy from easily selling new shares to raise cash.
To fix this, Strategy chose to grow its U.S. dollar reserves. Le noted that having quick access to cash is highly useful for keeping Strategy stock safe from sudden crypto drops.
Another key detail for MSTR stock is its premium over its actual Bitcoin holdings. Right now, MSTR stock trades at 1.02 times the value of its coins. Le stated that as long as Strategy stock stays above that line, it means shareholders are happy with the performance.
Is Strategy Stock a Buy, Hold, or Sell?
According to TipRanks, Strategy (formerly known as MicroStrategy) stock has a consensus Strong Buy rating among 14 Wall Street analysts. This rating is based on 13 Buys and one Hold rating assigned in the past three months. The average 12-month MSTR price target of $275.46 implies 182.3% upside from current levels. (See MSTR stock forecast)
