Strategy Insiders Buy In While Analysts Predict Big Upside

Insiders sold shares of Strategy (NASDAQ: MSTR), previously called MicroStrategy, in Q3. Their sales increased each quarter and hit a two-year maximum. However, despite outpacing the amount of insider buying, the market does not view them negatively. The sales were done primarily by prearranged selling plans, and the nature of buying offsets the volume. 

Insiders, including several directors, the CEO, CAO, CFO, and an EVP, made purchases in late July, many of them buying preferred shares. 

Preferred shares are an attractive investment due to their higher-than-average dividend yields, steady income, and priority over common stockholders; the fact that MSTR insiders are buying them is viewed as a positive sign regarding the company’s fundamentals and future outlook. 

The outlook for MSTR business quality and share prices is tied to Bitcoin, and Bitcoin is trending higher. The cost of the digital asset recently topped $120,000 and, although estimates vary, is expected to continue trending higher at a steady pace over the coming years.

Among the reasons is the halving, which occurs every few years and reduces miners’ rewards and available supply; other reasons include accelerating adoption and deepening penetration of Bitcoin into the global financial ecosystem. 

Analysts and Institutions Provide Strong Support for MSTR Stock

The analysts' activity is robustly bullish, providing a strong tailwind for the market. Data tracked by InsiderTrades reveals that coverage is on the rise, increasing by more than 100% to 14 in the preceding 12 months. The sentiment is firm at Moderate Buy, and the price target revisions are positive.

The price target revisions have lifted the consensus by more than 160% in the preceding 12 months, with the consensus in early August forecasting a 50% upside and the latest updates leading to the high-end range. That puts the market for MSTR stock near $700, an additional 28% upside from the consensus target.

Regarding the institutions, their activity has slacked off since Q1 2025, but has been bullish on balance every quarter of the year. 

Short interest is a concern for MSTR investors and traders. Although it wasn’t astronomical in July, running under 10%, it has been rising in recent reports and trending near long-term highs. With this force in place, MSTR's stock upside potential may be limited.

The question is whether the company can produce value for its investors sufficient to drive the price action above critical resistance targets. Those are near the $450 level and may be tested again before the end of the summer.

A move above $450 would reflect a significant change in the market dynamic and lead to a potential $200 price increase to $650, aligning the market with the analysts’ high-end range.

High Expectations for Strategy’s FQ3 Results

Strategy blew past its guidance and analysts' targets in Q2 due to the rapid advance of Bitcoin prices and its use of leverage. The company’s capital-raising efforts aided a 25% year-to-date increase in Bitcoin yield per share, a significant driver of share price value over time.

The guidance was also increased, leading analysts to lift their targets and set a high bar for the company to beat. The analysts forecast only a marginal improvement in the core software business but a significant increase in earnings. Earnings per share are expected to top $9.30, approximately $11 better than the previous year. 

Among the risks for investors are the price of Bitcoin, which fluctuates and may enter a correction at any time, and dilution. The company leans heavily on dilution and debt-related instruments to fund its BTC purchases.

Highlights at the end of Q2 include a 71% increase in the diluted share count, a 14% increase in long-term debt, roughly doubled total liabilities, and three tranches of mezzanine debt that weren’t on the balance sheet before. Capital-raising activities are expected to continue in 2025. 

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The article "Strategy Insiders Buy In While Analysts Predict Big Upside" first appeared on MarketBeat.