What's Behind TD Cowen's Bullish $400 Price Target for Strategy (MSTR)?

TD Cowen recently boosted its price target for Strategy (MSTR) to $400 per share, implying a potential gain of over 140% from current levels near $166. The investment firm maintained a buy rating, driven by the company's accelerating bitcoin purchases and a strategic shift toward less dilutive financing. Below, we answer key questions about this bold forecast, the metrics behind it, and the risks investors should consider.

Why Did TD Cowen Raise MSTR's Price Target to $400?

TD Cowen increased its price target from around $166 to $400, citing two main catalysts: faster-than-expected bitcoin accumulation and a change in capital structure that supports growth in bitcoin per share. The brokerage believes Strategy's aggressive purchases—such as acquiring nearly 25,000 BTC in a single week—outpace dilution from share issuance. Additionally, the company's use of preferred equity instead of common stock reduces shareholder dilution. TD Cowen applies a valuation multiple to projected bitcoin gains (over $15 billion in 2026) and incorporates the company's expected holdings, debt, and preferred equity obligations to arrive at the $400 target. Despite recent stock volatility—shares are down about 60% over the past year—the firm remains bullish on MSTR as a leveraged proxy for bitcoin.

How Much Bitcoin Does Strategy Hold Now?

As of mid-May 2025, Strategy holds 843,738 bitcoins, worth approximately $64 billion at current market prices. That position represents more than 4% of the total bitcoin supply cap of 21 million coins. Under executive chairman Michael Saylor, the company has accelerated its buying pace. Between May 11 and May 17 alone, Strategy acquired 24,869 BTC for about $2.01 billion. TD Cowen now projects that the firm will purchase close to 100,000 bitcoins in the second quarter of 2025. This aggressive accumulation is central to the bull case, as it boosts the key metric of bitcoin per diluted share—rising from 1.95 per 1,000 shares at the end of 2025 to 2.21 currently.

What Is the Key Metric That TD Cowen Focuses On?

The most important metric for TD Cowen's thesis is bitcoin per 1,000 fully diluted shares. This figure has increased to 2.21 from 1.95 at the end of 2025, indicating that bitcoin accumulation has outpaced dilution from share issuances. Many investors worry that Strategy's constant need to raise capital—through stock or convertible notes—dilutes existing shareholders. However, this metric shows that each share's implied bitcoin exposure is actually rising. TD Cowen sees this trend continuing if the company maintains its current pace of purchases and uses less dilutive financing methods like preferred equity. The firm expects this ratio to keep climbing, supporting a higher stock price over time.

How Does Preferred Equity Help Strategy's Shareholders?

In the second quarter of 2025, Strategy raised about $1.95 billion by issuing preferred equity, with most proceeds used to buy bitcoin. Unlike common stock issuance, which increases the number of shares outstanding and dilutes existing holders, preferred equity is considered less dilutive. Preferred shares typically have fixed dividends and limited voting rights, so they don't dilute common shareholders' ownership as much. TD Cowen views this shift positively, as it allows Strategy to fund bitcoin purchases without severely watering down per-share metrics. The preferred structure also helps maintain the company's credit profile, making it more attractive to institutional investors who favor stable returns.

What Action Did Strategy Take to Reduce Its Debt Burden?

Strategy recently repurchased approximately $1.5 billion of its convertible notes at a discount. This move reduces future refinancing risk and limits potential dilution from those notes being converted into common stock. Convertible notes are debt that can be exchanged for shares, and when bought back cheaply, the company lowers its overall liabilities. TD Cowen analysts described this transaction as a positive signal for both equity holders and creditors, as it strengthens the balance sheet. By retiring debt at a discount, Strategy improves its financial flexibility and decreases the chance that forced conversions will dilute shareholders later. This aligns with the broader goal of growing bitcoin per share.

What Valuation Framework Does TD Cowen Use for MSTR?

TD Cowen's valuation approach for Strategy involves applying a multiple to projected gains from its bitcoin holdings. The firm forecasts bitcoin-related gains exceeding $15 billion in 2026. From that, they subtract the company's outstanding debt and preferred equity obligations, then divide by the number of shares to arrive at a per-share estimate. This framework treats MSTR essentially as a leveraged bitcoin investment vehicle. The multiple reflects the expected volatility and growth potential of the digital asset. Using this method, TD Cowen derives a price target of $400, which includes a premium for the company's active treasury management and ability to accumulate bitcoin more efficiently than individual investors could.

What Are the Risks to TD Cowen's Bullish Thesis?

Despite the optimistic price target, Strategy's stock remains highly volatile and closely tied to bitcoin price movements. Shares have fallen about 60% over the past year and sit well below their 52-week high above $450. A sharp decline in bitcoin—like the recent pullback—can quickly erode MSTR's value, given its role as a leveraged proxy for the cryptocurrency. Additionally, if bitcoin purchases slow or the preferred equity market tightens, the growth in bitcoin per share could stagnate. Dilution risks also persist if the company must issue more common stock to fund operations or debt repayments. Finally, regulatory changes or a prolonged bear market in crypto could derail the entire thesis. Investors should weigh these factors before following TD Cowen's buy recommendation.