TD Cowen Cuts Strategy Price Target to $500 Amid Bitcoin Volatility

Strategy’s recent move to raise $1.44 billion was framed by TD Cowen analysts as a “prudent” step to shore up liquidity. The funds are earmarked primarily for dividend payments on preferred shares, a necessity as the company’s conventional funding source—issuing common stock—has grown constrained. Historically, Strategy has issued common shares to finance the expansion of its colossal $60 billion Bitcoin stockpile. However, with its stock price languishing, this tactic has become a less efficient way to grow its Bitcoin holdings per share, leading the company to issue $7.7 billion in preferred shares this year instead.

While the analysts acknowledged that bolstering cash reserves during market stress benefits all stakeholders and demonstrates continued access to capital markets, the financial mechanics of the raise have direct consequences. The capital was raised to avoid the potential need to sell Bitcoin holdings, a scenario Strategy has stated it would consider only as a last resort. This defensive positioning highlights the tension between maintaining its strategic Bitcoin reserve and meeting its financial obligations to preferred shareholders.

The core of TD Cowen’s revised outlook hinges on the dilutive impact of Strategy’s financial maneuvers. The bank’s adjusted model explicitly reflects the cost of raising cash to fund preferred share dividends at a time when Strategy’s stock price is hovering near its lowest point in 13 months. According to Yahoo Finance data cited in the analysis, shares recently traded around $188, marking a 24% decline over the past month and a 35% drop year-to-date.

This depressed stock price creates a vicious cycle: it leads to more significant shareholder dilution than previously forecast when the company raises capital. In response, TD Cowen analysts stated that Strategy’s “heightened volatility warrants a lower earnings multiple.” Consequently, they drastically reduced their applied earnings multiple from 9x to 5x. This recalibration is a major driver behind the new $500 price target, which the analysts admit may seem “out of context” given recent negative sentiment but argue is reasonable due to the company’s embedded leverage and the potential for Strategy’s Bitcoin premium to shift rapidly with the digital asset’s price.

TD Cowen’s cautious stance presents a stark contrast to ongoing bullish sentiment from other quarters of Wall Street, illustrating the polarized view on Strategy’s future. Notably, investment bank Benchmark raised its 2026 price target for Strategy to $705 earlier the same week. In a note, Benchmark Analyst Mark Palmer argued that Strategy’s stock remains “one of the most powerful asymmetric vehicles in global markets,” citing its unmatched ability to raise capital and provide pure-play exposure to Bitcoin’s potential upside.

This divergence of opinion centers on the interpretation of the same fundamental data. TD Cowen sees dilution and volatility as critical headwinds that compress valuation. In contrast, firms like Benchmark view Strategy’s capital-raising prowess and direct Bitcoin linkage as unparalleled long-term assets. The performance gap further complicates the picture: while Strategy’s stock has plummeted 35% this year, the price of Bitcoin itself has declined a more modest 2.5% to just above $92,000, according to CoinGecko data, suggesting the company’s stock-specific issues are outweighing the performance of its primary holding.