Monness Crespi Hardt says there are "limits" to MicroStrategy's bitcoin accumulation approach. The firm downgraded the stock to sell from neutral and established a price target of $220, which implies a roughly 23% pullback from where the shares ended Monday. "While we were negative on several respects upon initiation … we have gained incremental confidence that the convertible issuance strategy is likely tapped," Gus Galá, an analyst at the firm, said in a note Tuesday. The company, which recently rebranded as Strategy, said in its latest earnings report that it will rely more heavily on fixed income issuance since it had gotten so far ahead of schedule on its three-year plan to raise $42 billion – $21 billion in equity and $21 billion in fixed income. About $18.6 billion of the $21 billion has been raised in at-the-market activity already. The plan also includes buying an equivalent amount in bitcoin. "We believe the whittling down of the premium will start to happen considering the focus on fixed income securities where there's been … less than stellar uptake as measured by discounts to face value," he said. "If fixed income securities do not become a greater portion of issuance, the BTC treasury strategy will look [increasingly] challenged." MicroStrategy trades as a proxy for the price of bitcoin, and often trades at a premium to the value of the company's bitcoin holdings because investors believe the firm will continue to increase the amount of bitcoin it holds per share in the future. The company, founded by bitcoin evangelist Michael Saylor, began buying bitcoin in 2020 – often issuing convertible debt to raise capital to buy more of the cryptocurrency – and has become even more aggressive in its accumulation strategy in recent years. —CNBC's Michael Bloom contributed reporting. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
