Strategy Inc enters the back half of August with the tables turned — the short unwind that looked orderly last week has become a rout, with the stock up 37% on the week while remaining bears scramble for cover.
The narrative shift from last week's note is stark. Seven days ago, shorts were exiting steadily but sellers were keeping the stock pinned at $92. Now the stock has closed at $126.83, up 3.4% on Tuesday alone. Short interest edged up 5.4% in the latest daily estimate to 29.4 million shares — a one-day uptick after a week of covering — but the monthly picture tells the real story: SI has fallen 26.5% over the past 30 days, from a peak around 40 million shares in mid-July to roughly 29 million now. Bears who stayed short through the rally are sitting on significant losses.
The borrow market offers no relief to remaining shorts, but not because conditions are tight — quite the opposite. Availability has actually loosened dramatically as the stock ran, jumping to 692% of short interest from 412% just a week ago, the most abundant borrow environment of the past year. Cost to borrow is running at just 0.42%, down 14% on the week. Shorts who want out face no mechanical squeeze forcing their hand, but they face a stock that has already moved sharply against them. Options positioning has tilted decisively toward calls: the put/call ratio has dropped to 0.81, nearly 1.7 standard deviations below its 20-day average of 0.90, and close to the 52-week low of 0.758. The options market is leaning bullish at the most aggressive angle in months.
The Street is divided, and the timing of analyst moves this week captures the awkwardness of covering a bitcoin proxy. Bernstein's Gautam Chhugani trimmed his target today to $350 from $450 — maintaining an Outperform but clearly marking down bitcoin assumptions — while Canaccord lifted its target to $175 from $130 just yesterday, keeping a Buy. The spread between those two targets ($175 vs $350) reflects genuine disagreement about what the stock is worth, rather than a consensus view. Earlier in the month, Barclays, Cantor Fitzgerald, and B. Riley all cut targets while holding positive ratings, a pattern suggesting the Street broadly still likes the direction but has reduced its ambitions after the stock's brutal H1. The mean price target of $225 implies roughly 77% upside from current levels — but that figure blends some very different assumptions about bitcoin's trajectory. The bull case centres on the company's renewed focus on net bitcoin value per share and its 12-month dividend coverage comfort. The bear case points to the same concentration: a stock this tightly linked to bitcoin moves fast in both directions, and dividend sustainability remains a live question.
Institutional holders have been adding, not cutting. Capital Research held 42.2 million shares as of July 31 — the single largest external holder at nearly 11% of shares — and added 1.2 million on the quarter. BlackRock added 1.6 million shares in the same period to reach 5% of the float. Those flows suggest large passive and active funds are comfortable accumulating on weakness, which helps explain the bid materialising this week as the stock retraced from its summer lows.
Earnings are not due until October 30, giving the bitcoin thesis plenty of time to run — or reverse — before the next scheduled catalyst. The key variable to watch is whether short interest continues its multi-week unwind or whether the one-day uptick on August 25 marks the beginning of fresh bearish re-engagement at higher levels.
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