Strategy's Bitcoin Buying Pause Sparks Concern Over Debt-Heavy Business Model

Strategy Inc., the company behind the MSTR stock ticker, has been on a Bitcoin buying pause for four consecutive weeks. Instead of purchasing more cryptocurrency, Strategy has raised its cash reserves to $3.2 billion by selling stock.

This move comes as investors scrutinize the company's business model, which relies heavily on debt and stock issuances to buy Bitcoin. With Bitcoin trading below the average cost of $75,476 per coin held by Strategy, the company is sitting on paper losses of roughly $22 billion.

Strategy's debt structure acts as a multiplier, amplifying both gains and losses. Over the past year, MSTR stock dropped 77% compared to a 45% drop in Bitcoin itself. The company's transparency report now breaks down who actually owns its Bitcoin, showing that lenders hold $22 billion of the total $58 billion pile.

Despite the pause in buying, Wall Street remains optimistic about Strategy Inc., with 13 out of 14 analysts tracked by TipRanks rating it a Buy. The average 12-month price target sits at $275.46, implying around 181% upside from current levels.