Key Insights:

• KBW initiated coverage of Strategy with an outperform rating and a $560 price target.
• The company may qualify for S&P 500 index inclusion by updating its FASB accounting standards.
• Strategy utilizes various methods to enhance its Bitcoin holdings.

Overview:
Strategy (MSTR), previously known as MicroStrategy, is viewed as an attractive option for investors seeking leveraged Bitcoin (BTC) exposure, as per a recent report from KBW.
The investment bank has begun coverage of Strategy with a favorable outlook and has set a price target of $560 for its shares. The stock saw a slight increase of 1%, trading around $329.

Once Strategy updates to the FASB’s accounting rules for Bitcoin, expected in Q1 2025, they will shift from an outdated approach to fair value accounting, incorporating unrealized gains or losses into their net income. The firm previously reported an impairment loss of $1 billion due to adherence to the old standards. To meet S&P 500 inclusion criteria, a company needs positive net earnings in recent quarters.

Strategy holds the largest Bitcoin reserves of any publicly traded company and has several tactics in place to increase this value. Looking forward, it also has potential to realize on-chain yields from applications developed on the Bitcoin network, which could lead to a significant increase in value given Bitcoin’s secure and decentralized nature.