Benchmark analyst Mark Palmer says MicroStrategy‘s recent change to permit tactical equity issuance is not a retreat from its bitcoin strategy but a deliberate move to preserve the company’s ability to buy more bitcoin when markets weaken. Retail investors criticized Executive Chairman Michael Saylor after the firm relaxed a self-imposed rule that limited share issuance when its market premium to bitcoin net asset value (mNAV) fell below 2.5x.
Palmer argues the stock’s recent weakness is primarily driven by a compressing premium to mNAV and wider crypto and macro volatility, rather than by capital mismanagement. By updating guidance on Aug. 18 to allow tactical issuance below the 2.5x threshold, MicroStrategy regained flexibility to keep its bitcoin accumulation “flywheel” turning during periods of price weakness.
The move is consistent with MicroStrategy’s track record of balance-sheet adaptation — from paying down restrictive debt and refinancing with convertible bonds to introducing perpetual preferred stock that supplies permanent capital without near-term refinancing risk. According to Palmer, the preferred-stock program has also spawned new bitcoin-linked instruments that appeal to hedge funds and volatility traders, broadening the firm’s investor base.
Another milestone on the horizon is potential inclusion in the S&P 500. Admission would likely trigger sizable passive inflows, embedding direct crypto exposure into mainstream portfolios alongside other public crypto-adjacent names.
Palmer reiterated a buy rating and a $705 price target — more than double the recent share price of $332. Investors should remember that analyst ratings and price targets are projections, not guarantees; ongoing bitcoin volatility, shifts in the mNAV premium and broader market sentiment can materially affect outcomes.
Source: CoinDesk. Read the original coverage for full details.