TD Cowen has slashed its price target for Strategy shares by 35%, citing Bitcoin's persistent weakness. The investment bank lowered its target from $400 to $260.
Analysts led by Lance Vitanza now forecast Bitcoin reaching $100,000 by year-end, down from a previous $140,000 estimate. Bitcoin fell below $60,000 Tuesday, down more than 20% over the past month.
Strategy shares dropped 8.6% to $84.75 on Tuesday. The stock has fallen nearly 41% since the company sold Bitcoin roughly a month ago.
Despite the price target cut, TD Cowen expressed a positive outlook on Strategy's new Digital Credit Capital Framework. Analysts described it as "a positive for credit visibility and capital flexibility."
The framework outlines how Strategy plans to manage its cash reserves, preferred stock, and its stockpile of 847,363 Bitcoin. The company also reported cash reserves of $2.55 billion.
"This tactical move should go a long way toward restoring confidence in the company's ability to weather a protracted Bitcoin downturn," analysts wrote regarding the cash expansion.
Strategy's Stretch preferred stock saw its dividend rate hiked to 12% on Monday. The stock fell 0.7% to $83.11 on Tuesday, remaining below its $100 par value.
The new framework also includes a monetization program allowing Strategy to sell up to $1.25 billion in Bitcoin to bolster cash reserves. This formalizes Bitcoin as a flexible source of capital.