Strategy shares rise after capital framework update

• Strategy unveiled a new capital framework allowing potential Bitcoin sales of up to US$1.25 billion, drawing mixed reactions from analysts and investors.
• Benchmark maintained its Buy rating and US$570 price target as Strategy shares rose more than 12% before easing in premarket trading.
• Supporters said the changes improve financial flexibility, while critics questioned the long-term impact on Strategy's Bitcoin accumulation strategy.

Strategy introduced a new capital framework that authorises potential sales of up to US$1.25 billion in Bitcoin (CRYPTO:BTC), prompting a positive response from some Wall Street analysts while raising concerns among other market participants.

Benchmark Equity Research maintained its Buy rating and US$570 12-month price target, while Strategy shares rose 12.6% to about US$92.70 and STRC preferred shares gained 12.2% to around US$83.70 before both eased in premarket trading.

“The upshot is that Strategy is now an active manager of both sides of its capital structure, an approach that we view as a significant positive for its shareholders,” said Benchmark's research analysts.

Strategy said the framework would allow it to raise capital by selling up to 21,082 BTC, representing about 2.5% of its 847,363 BTC holdings, instead of relying solely on issuing new shares or debt.

Some investors said the changes could improve capital management, while others argued the company may eventually need to sell US$2 billion to US$3 billion of Bitcoin to reduce market concerns, and following the announcement Strategy shares were up 12.6% at about US$92.70.

Supporters, including Moonrock Capital founder Simon Dedic, said the revised framework could strengthen investor confidence, while trader Scott Melker said it remained too early to judge whether the strategy would succeed over the long term.

Critics, including Arca Chief Investment Officer Jeff Dorman and Ripple CEO Brad Garlinghouse, questioned whether greater financial flexibility would create lasting shareholder value or strengthen Strategy's long-term Bitcoin strategy.

At the time of reporting, Bitcoin price was $58,189.00.