Strategy’s premium justified by Bitcoin capital flywheel, says TD Cowen

TD Cowen pushed back on critics of Strategy’s sky-high valuation, calling arguments that the stock should only trade at the value of its Bitcoin “logically flawed” and saying that the company’s relentless share issuance under its upsized 42/42 plan has actually boosted, not diluted, investors’ claim on BTC.

Strategy’s net asset value premium is the percentage by which its market capitalization exceeds the worth of Bitcoin holdings. The Block’s data dashboard shows that MSTR currently has an equity value of $124.3 billion and approximately $72 billion in BTC, which implies a NAV premium of roughly 72.6%.

“Bears have argued that Strategy’s premium is nothing more than a greater fools theory – that investing in Strategy cannot be prudent, because bitcoin yield is completely dependent on the company’s premium,” TD Cowen analysts Lance Vitanza and Jonnathan Navarrete wrote. “It’s a self-fulfilling recursive loop that could just as easily unwind, they claim. There are many flaws in this argument.”

The brokerage said Strategy’s premium makes sense because the firm funnels cheap capital into bitcoin and grows coins per share on a fully diluted basis, something retail holders or rival corporates can’t easily replicate.  Strategy can generate bitcoin “yield” even without a market premium by tapping preferreds and converts, borrowing at a blended rate of 0.421% that individual investors cannot access.

900,000 bitcoin by 2027

Last week, Strategy sold 1,636,373 common shares through its $21 billion at‑the‑market program and several thousand of its three preferred stock offerings for a total of $739.8 million in proceeds. It then bought 6,220 Bitcoins at an average price of $118,940 each, creating an incremental 3,077‑BTC “gain” without raising the share count, TD Cowen analysts said.

As a result, each MSTR share now represents 20.8% more bitcoin than on Jan. 1, and more than twice as much as 18 months ago. The analysts believe that such an “intrinsic” premium should persist — and could even widen — because avoiding ETF fees alone can justify a roughly 20% markup over long horizons, with the firm’s capital flywheel compounding from there.

The report lands as Strategy adds yet another funding pipe. On Monday, it rolled out Stretch (STRC), a fourth series of perpetual preferred stock to raise more cash for Bitcoin purchases. Strategy’s stash stood at 607,770 BTC as of July 21, making it the largest publicly listed holder of crypto’s biggest asset by a large margin, according to The Blocks data dashboard.

TD Cowen kept a $680 price target and modeled the company holding nearly 900,000 BTC by the end of 2027, or 4.3% of all coins that will ever be mined.

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