Despite a 40% crash, it is still considered a 170% bullish rise in Wall Street: Why is Strategy (MSTR.US) so stubbornly supported?

Currently, Strategy Inc. (MSTR.US) under the leadership of Michael Saylor is facing almost widespread confidence collapse - only Wall Street analysts remain steadfast. Although Strategy's common and preferred stocks have plummeted along with Bitcoin, and analysts have lowered their target prices, they still believe that the stock has more upside potential than any other Nasdaq 100 component. Not even Elon Musk's SpaceX (SPCX.US) is exempt - the stock has fallen below its IPO price after its record debut. According to compiled data, 17 analysts have given Strategy a "buy" or equivalent rating, including analysts from TD Cowen, Citigroup, and B. Riley Securities. In contrast, there are 3 "hold" ratings and only 1 "sell" rating. This bullish outlook comes at a time when Strategy is undergoing a complete transformation of its business model that it was once known for. Saylor has transformed the company from a little-known enterprise software manufacturer to the publicly traded company with the largest holdings of Bitcoin. After years of urging investors to buy cryptocurrency, the company began selling some of its holdings to raise cash. By the end of June, Strategy had abandoned its "buy and hold" strategy, instead actively managing its liquidity and balance sheet. These changes aimed to enhance its ability to meet future debt obligations but have failed to restore market confidence. The company's securities have not yet regained lost ground. Nevertheless, Wall Street analysts largely continue to maintain a bullish outlook. Their predictions are partly based on the expectation that Saylor's financing machine can continue to raise funds, and a rebound in Bitcoin will allow the stock to regain the premium that investors once assigned to it. TD Cowen analyst Lance Vitanza said that his view of Strategy depends on his outlook for Bitcoin's performance in the coming years. He said in an interview, "I am very confident that in two or five years, Bitcoin will reach tens of thousands of dollars - but it won't be a straight, smooth, upward line." On Thursday, Bitcoin was trading at around $66,000, nearly half of its all-time high at the end of last year. Strategy's stock price closed around $100 on Wednesday. Strategy did not respond to requests for comment. The consensus one-year target price for Strategy is around $275, implying a 170% increase from current levels. According to compiled data, this is nearly twice the expected increase for SpaceX, which is the second highest rated stock in the Nasdaq 100 index. Such a large implied upside has raised questions. Adam McCarthy, research director at cryptocurrency liquidity and market data firm LO:TECH, said that such a high expected increase "significantly departs from reality and seems highly unreasonable." The overall target price figure comes with a significant warning. The consensus target price includes recommendations given at different stages of Strategy's decline. According to data, several companies have updated their views in recent weeks, while others have not adjusted their ratings or target prices for months, with some ratings even dated back to the end of 2025. Such a large implied increase may also partly reflect the speed of Strategy's decline. Its stock has dropped over 40% in the past three months, making it the worst performing component stock in the Nasdaq 100 index. Since analysts typically adjust their target prices less frequently than stock prices are repriced, sudden sell-offs could create a significant gap between market prices and consensus expectations. However, analysts have already lowered their expectations. Compiled data shows that due to many companies lowering their forecasts and valuation assumptions for Bitcoin, the average target price has fallen from above $460 at the beginning of the year. But most analysts are still reluctant to give up their "buy" or equivalent ratings. Recent research reports overall remain positive. Data shows that out of 11 analysts who have updated their views, 9 have given Strategy a "buy" or equivalent rating, 1 has a "neutral" stance, and 1 recommends selling the stock. While recent buy ratings mask significant differences in valuations - with target prices ranging from $130 to over $500, these ratings all point to a consistent optimism. Some of the analysts covering Strategy are affiliated with institutions that have business relationships with the company, such as underwriting securities issuances, market-making for its securities, and acting as authorized agents for its on-exchange issuance projects. Earlier this year, Saylor stated that about 80% of Stretch preferred stock had been sold to retail investors through on-exchange issuance projects. He said he hoped these securities would become the main source of funding for Strategy. If retail investors remain the main buyers, then the ability of Strategy to continue financing through this project will largely depend on the willingness of retail investors to continue buying these preferred stocks. McCarthy said, "If you're pricing it like a bank analyst, maybe you'd think that retail flows have resiliency, and if interest rates go down next year, Bitcoin might make a comeback."