TD Cowen raised its price target for Bitcoin treasury company Strive from $44 to $56, citing rapid Bitcoin accumulation and a new financing plan.
According to The Block, analysts Lance Vitanza and Jonnathan Navarrete said Strive’s Bitcoin purchases over two weeks exceeded their forecast for the entire fourth quarter. Despite this, ASST shares were trading at $23.96, down 6.6% on Friday at the time of the report.
The new $56 target is about 27% above the previous estimate of $44. At the heart of the gap between analysts’ optimism and the stock’s decline are the company’s growing Bitcoin treasury and how it is financing that growth.
Bitcoin purchases exceeded the quarterly estimate in two weeks
Strive’s Bitcoin holdings rose from 28,000 BTC to 35,595 BTC since the end of September. The increase of about 7,600 BTC exceeded TD Cowen’s forecast of 4,750 BTC in purchases for the entire quarter.
This total includes purchases of 3,311 BTC announced Tuesday and 2,822 BTC disclosed Wednesday. The report valued the company’s Bitcoin holdings at approximately $2.9 billion.
Why did the stock remain under pressure as the treasury grew?
According to the analysts, the exercise of warrants, which give investors the right to buy shares under certain conditions, significantly increased the share count. As a result, although the Bitcoin treasury grew rapidly, the increase in Bitcoin per share was constrained.
TD Cowen also said some investors may have sold shares they received by exercising warrants. The analysts expect pressure from this source to ease now that no warrants with a $27 exercise price remain.
Why is the new financing plan important?
Strive increased its SATS preferred stock offering to 7 million shares. The offering, priced at $90 per share, aims to raise a total of $630 million and is expected to close on October 20. The company plans to set aside enough cash to cover 18 months of dividend payments.
According to TD Cowen, this structure could fund additional Bitcoin purchases without issuing new common shares. Behind the analysts’ higher target is not only the pace of purchases but also the expectation that the financing’s effect on the number of common shares could change.
Not investment advice.