MicroStrategy stock falls 6% as TD Cowen upgrades Bitcoin buying

MicroStrategy (NASDAQ:MSTR) dropped 6% on Tuesday despite TD Cowen’s bullish projection that the firm will buy roughly 100,000 Bitcoin in Q2, lifting its full‑year BTC yield estimate to 19.8% from 18.2% [1]. The surge in projected purchases comes after the company already exceeded its original Q2 buying target, having acquired more Bitcoin midway through the quarter than TD Cowen had modeled for the entire period [1].

The uptick in buying is being funded almost entirely through preferred‑stock issuances. In Q2, Strategy raised about $1.95 billion, with the bulk of proceeds funneled directly into Bitcoin purchases [1]. Preferred shares, which pay an 11.5% annual dividend, now account for over 95% of the $2.01 billion buy announced May 11‑17, while common equity issuance remains minimal [2][3]. This financing shift reflects a compressed “mNAV” premium – the multiple of the company’s market value to its Bitcoin holdings – which has fallen from a peak of 3.89× in November 2024 to roughly 1.24× today [2][3]. At such a low premium, issuing common stock adds little Bitcoin per share, prompting reliance on preferred capital.

Even as the stock slides, the Bitcoin position has grown dramatically. Strategy now holds 843,738 BTC, valued at about $64.8 billion, outstripping its market capitalization of $58.6 billion [2][3]. The blended cost basis sits at $75,700 per coin, leaving a modest $1,100 per‑coin unrealized gain at current prices near $76,800 [2]. A sustained Bitcoin price below the cost basis would erase that cushion and mark the first time the portfolio is underwater.

The market’s disconnect between the firm’s Bitcoin assets and its equity valuation suggests that the “flywheel” model – issuing premium‑priced stock to buy more Bitcoin and increase per‑share holdings – is stalled. Unless the mNAV premium rebounds toward the 2× range that once powered rapid share‑price appreciation, the stock may continue to trade at a discount to its underlying crypto holdings. The next quarter’s price action will likely hinge on three factors: the trajectory of the mNAV premium, Bitcoin’s price relative to the $75,700 cost basis, and the mix of financing used for future purchases.