MSTR Stock Recovery Can Begin Anytime as Institutional Demand Jumps

Market experts believe that the worst of the MSTR stock correction could be behind us, and recovery could begin anytime soon. The optimism comes as Strategy chairman Michael Saylor announced on Dec. 22 that the firm has increased its USD reserves to $2.19 billion. Furthermore, data shows that the institutional ownership of MSTR shares has increased over the past month.

MSTR Stock Recovery Can Happen Anytime

Crypto market commentator Fred Krueger said Strategy (MSTR) is now trading at a relatively modest premium to its underlying Bitcoin holdings. This will favour the MSTR stock if the Bitcoin price sees upside soon.

According to Krueger, MSTR is currently valued at roughly a 10% premium to its net asset value (NAV). He added that the company has approximately 20% effective leverage based on a comparison of about $60 billion worth of Bitcoin BTC $87 460 24h volatility: 2.4% Market cap: $1.75 T Vol. 24h: $48.67 B on its balance sheet versus a market capitalization of roughly $50 billion.

With Strategy increasing its USD reserves, Kruger noted that the firm has close to three years’ worth of cash runway. Strategy (MSTR) has seen a modest dilution in its Bitcoin-per-share metric due to the buildup of a $2.19 billion cash reserve.

Bitcoin per Share MSTR | Source: Mark Harvey

However, analysts like Mark Harvey believe that this move will strengthen the company’s long-term financial position. The larger cash balance reduces Bitcoin exposure on a per-share basis in the near term. However, it provides Strategy with greater resilience during longer Bitcoin drawdowns.

The cash reserve also helps to ease refinancing and liquidity pressure linked to the company’s outstanding convertible bonds. This helps in improving the company’s overall credit profile. 

Market observers note that this added financial flexibility could support a more favorable assessment from credit rating agencies such as S&P Global. 

Institutional Demand Gathers Steam

A public pension fund in New Jersey has disclosed a $16 million investment in shares of Strategy (MSTR), according to recent filings. On the other hand, the institutional ownership of the MSTR stock has surged from $155 million last month to now at $165 million. 

Citigroup has still maintained a “buy” call on the MSTR stock. However, it has reduced the target to $325 per share, from its previous target of $485. 

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