Analysts warn of a fall in the Bitcoin premium Strategy

• Cantor Fitzgerald LP, TD Cowen, and Maxim Group LLC are cutting their forecasts for Strategy due to the fall in the Bitcoin premium.
• According to them, the average target price for the stock fell to its lowest level since May.
• In their opinion, to fulfill the company's plan, the asset needs to rise in price to $150,000.

Strategy (formerly MicroStrategy), led by renowned Bitcoin enthusiast Michael Saylor, reported $2.8 billion in net profit for Q3 2025, exceeding market expectations. However, even this result failed to allay analysts' concerns about future quarters, amid a shrinking premium between the company's market capitalization and its Bitcoin reserves, according to a Bloomberg report.

Three Wall Street analysts—from Cantor Fitzgerald LP, TD Cowen, and Maxim Group LLC—cut their price targets for Strategy shares following the report. The average price target fell to its lowest level since May 2025.

The key reason is the narrowing of the Bitcoin premium, that is, the difference between the market price of a company's shares and the value of its Bitcoin portfolio.

“After three remarkable quarters, the fourth has started slowly, with Bitcoin price growth slowing and the premium sharply shrinking. This has led to a slowdown in capital creation, and returns this quarter are now measured in basis points rather than percentages,” wrote Lance Vitanza, an analyst at TD Cowen, in a note to clients.

Strategy, once a modest enterprise software developer, shifted most of its capital into Bitcoin in 2020, shaking up Wall Street, the publication noted.

Since then, the company's shares have traded not on expected earnings, but as a derivative of the market value of its crypto assets—a metric known as Market-to-Net Asset Value (mNAV).

The premium to mNAV, which previously reached double that level, has now fallen to around 1.3.

“The decline in the mNAV premium reduces Strategy's capital markets earnings potential, which negatively impacts its valuation,” said Brett Knoblauch, an analyst at Cantor Fitzgerald.

He added that to achieve the $20 billion operating income forecast for the fourth quarter, the price of Bitcoin must rise to $150,000 by the end of the year.

Despite the price target cut, Strategy shares rose 7% on October 31, demonstrating short-term investor confidence.

However, the company's shares remain more than 40% lower than their historical high in November 2024.

Meanwhile, analysts at Cantor Fitzgerald, TD Cowen, and Maxim Group maintained their “buy” ratings on Strategy shares, expecting a recovery in the Bitcoin price to support the company's value in the medium term.

As a reminder, S&P Global Ratings assigned Strategy a B- credit rating, calling its business model “risky” due to limited dollar liquidity.

Meanwhile, 10x Research experts estimated the likelihood of Strategy's inclusion in the S&P 500 at 60-70%, subject to strong quarterly results. At the same time, they noted growing market skepticism about the company's future prospects.

Source: cryptonews.net