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TD Cowen analysts mention that Strategy’s stock might face some bumps in the road due to an upcoming MSCI review.
The firm believes that PBTCs, including Strategy, will likely be taken off all MSCI indexes come February, with a formal decision expected around mid-January.
Cowen described this potential removal as “capricious,” but warned investors to be ready for ongoing selling pressure. They remind us that Strategy isn’t a fund, trust, or holding company, but rather a public operating company with all its revenue coming from its $500 million software business.
On the other hand, their Bitcoin treasury operations are exciting and active, creating unique Bitcoin-backed securities.
“Removing Strategy from broad indexes simply because of its Bitcoin focus seems arbitrary,” the analysts pointed out. They also questioned if MSCI’s reasoning shows a bias against crypto rather than adhering to strict classification rules. MSCI has expressed concerns that PBTCs could look like investment funds, which aren’t eligible for index inclusion.
Cowen argues that Strategy’s setup is distinctly different.
Strategy and MSCI Exclusion
The stakes are high. Recently, JPMorgan warned that excluding Strategy from MSCI could lead to a staggering $2.8 billion in passive outflows. If other indexes follow suit, the total could soar to $8.8 billion. Currently, Strategy’s market cap is about $59 billion, with around $9 billion flowing through passive index-tracking funds.
Any forced selling could really hurt an already thinned-out share price, according to JPMorgan.
Over the past few months, Strategy’s shares have dipped more than Bitcoin’s. The company’s mNAV—the ratio of market value to Bitcoin holdings—has slipped to just above 1.1, marking its lowest point since the pandemic. Since last November, investors have seen the stock drop over 60%. The preferred shares and bond issuances have also taken a significant hit.
Despite this volatility, Cowen holds a positive long-term view. The bank predicts that by 2027, the company could hold 815,000 BTC. If this happens, the intrinsic Bitcoin value per share could support a price target of $585—an impressive 170% upside from where we are today.
Cowen believes the recent weakness is due to market fluctuations and index-related fears, not a failure of Strategy’s core accumulation model.
Michael Saylor, the chairman of Strategy, downplayed the index worries. He recently stressed that the company operates as a fully-fledged business with active software and Bitcoin-backed credit programs. Saylor frequently points out their innovative financial products, including structured Bitcoin credit tools like $STRK and $STRC, which yield better returns than traditional credit markets.
Saylor imagines accumulating $1 trillion in Bitcoin and growing the company at a rate of 20–30% annually, using long-term appreciation to build a solid stash of digital collateral.
From this strong base, Saylor envisions issuing Bitcoin-backed credit with yields significantly higher than those in traditional fiat systems—potentially 2–4% better than corporate or sovereign debt—providing safer, over-collateralized options.
Saylor believes other large finance companies could adopt the Strategy model with their income.
Cowen also highlights possible advantages on the horizon. Inclusion in the S&P 500 could boost institutional ownership and stabilize investment flows into the stock. Clearer regulatory guidelines around Bitcoin could further enhance investor trust.
Strategy’s growth showcases the increasing significance of Bitcoin in global finance. Historically, its inclusion in indexes like the Nasdaq 100 and MSCI benchmarks has funneled crypto exposure into mainstream portfolios.
If MSCI decides to exclude the company, Cowen argues that while short-term disruptions might arise, long-term adoption trends will still stand strong.
Bitcoin itself has seen a rough patch recently, dropping from an October high above $126,000 to around $88,000 lately. Even amidst this downturn, Strategy continues to make substantial Bitcoin buys, now holding more than 3% of the total supply.
Bitcoin enthusiasts must keep the price above $84,000 after last week’s close. If it dips below, weak support shows up near $75,000, with stronger buying likely in the $72,000–$69,000 range. A deeper decline targets the “$58k gang” area at the 0.618 Fibonacci level around $57,700.
MSTR is up over 4% today, valued at $177.47.
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