Strategy: Down 77% And Still Isn't Cheap Enough

Summary MicroStrategy is rated Hold as its premium to mNAV has compressed to 1.14x, down from speculative highs, but not yet at a clear buy level. MSTR's market cap now sits below its Bitcoin holdings, but the company faces ongoing cash bleed from $1.1B in annual preferred dividends and debt payments. Further downside risk exists if Bitcoin weakens or Middle East tensions persist, as MSTR cannot raise accretive capital and sentiment remains fragile. The technical setup for BTC and MSTR is improved, but absent a clear catalyst or panic-driven discount, patience and a wait-and-see approach are warranted. The last time I wrote about Strategy Inc ( MSTR ) stock was in November 2024, the day when MSTR stock topped. My article was titled "MicroStrategy Stock: Signs Of Topping Have Appeared." I argued that the technical setup for both MSTR and Bitcoin ( BTC-USD ) wasn't great and that cracks were forming in the sentiment around MSTR stock, which was way too hot at the time. Lots of people didn't like my article because I went against the bulls. See below. Seeking Alpha Now, with MSTR stock 77% off its highs and BTC 46% off its highs, the story is a lot different. In other words, I don't want to poke my eyes out when looking at Strategy anymore (at least not as much). The reason is that the premium to mNAV, when using enterprise value, is now at 1.14x, a major improvement compared to the 3x+ multiples the stock used to carry. And its market cap is actually under its BTC holdings. Bitcoin's chart is also around a major support level, which can help stabilize MSTR stock for now. And the Crypto Fear & Greed Index is in fear territory. That's generally viewed as a good contrarian signal. Based on what I said above, you might think I've flipped to being bullish, but I give it a Hold rating because there are factors that offset the positives. Let's get into it. Why MSTR Isn't A Buy Basically, I don't think there's a clear Buy signal just yet. There's still a 14% premium to mNAV on an enterprise value basis, and that can come down to 1x if Bitcoin ends up making one more swing lower. I really don't see any reason to pay a premium for MSTR at the moment. Not to mention, Bitcoin and BTC-related stocks are more like sentiment plays than fundamental ones because there aren't traditional cash flows to value them on. You need good reasons to believe that sentiment will improve. At the current price, with its market cap under its BTC holdings, it's harder for MSTR to raise money in an accretive way. That's a possible reason why Strategy didn't buy any Bitcoin last week. This can hurt its performance, especially if its mNAV multiple stays at around this level for a while. That's because the company won't be able to quickly increase its BTC per share and because it's still on the hook for dividend and debt/interest payments (without generating any cash flow). The company will basically bleed cash on its payments if things stay the way they are. Since I'm more of a traditional investor who tends to buy stocks with real cash flows, I'd only ever consider MSTR stock in very particular scenarios. Those scenarios are 1) a true BTC panic where sentiment is absurdly low and the stock trades at or below 1.0x mNAV (using enterprise value) or 2) when the stock is clearly trending higher and I'm just trying to take advantage of short-term momentum. Right now, we're in a bit of a wait-and-see phase. Plus, if the Middle East conflict lasts longer than expected, BTC isn't likely to be a safe haven, and that can hurt MSTR. Therefore, I give it a Hold rating. It's been derisked a lot, which is why I don't want to give it a Sell rating, but it's just not "obvious." The Premium Still Has Room To Come Down If you look at Strategy's mNAV chart on a website like strategytracker.com, you'll see that it shows a 0.91x mNAV. MSTR's mNAV On A Market Cap Basis (strategytracker.com) That's true if you ignore debt, but the actual mNAV, according to Strategy itself, is 1.14x. strategy.com Now, let's be fair. The mNAV chart above shows that we're at very low levels. The mNAV multiple was around 4x in November 2024, and even near its low points in 2023, it was around 1x. So lots of the speculative excess is gone. But the final thing I'd want to see to fully conclude that speculative excess is gone is for the enterprise value mNAV multiple to drop to 1x or lower. Then, we can truly say there's absolutely no premium being assigned to MSTR. 1x has the potential to act as a support level for the stock, assuming stable Bitcoin prices. On the other hand, it's also worth noting that it doesn't have to act as a support. For example, Sharplink ( SBET ), an Ethereum ( ETH-USD ) treasury company with no debt or preferred shares, actually trades at 0.75x its fully diluted mNAV. Does that make sense fundamentally? I don't think so. But it goes to show how much sentiment can affect pricing. My point is that waiting for a 1x multiple at least ensures you won't overpay relative to its holdings and net debt position. Strategy Bleeds Cash While Waiting For A Rebound Strategy has four series of preferred shares that it issued over the years. The most popular is the Strategy Inc 9.0% SERIES A PERPETUAL STRETCH PREF STK ( STRC ) preferred shares, with a market cap just over $5 billion and an 11.5% yield. Because of its heavy issuance of preferred shares, it now has to pay $1.083 billion in dividends every year. With its current cash reserve of $2.25 billion, that's just 24.9 months of dividend coverage. MSTR's Dividend Coverage (strategy.com) It also has to make around $34.6 million in interest payments over the course of a year based on an average coupon of 0.421% and a notional debt value of $8.214 billion. Strategy's Debt (strategy.com) That's over $1.1 billion per year in payments, while its TTM free cash flow sits at -$112.5 million. If BTC stays flat or falls, MSTR will have trouble raising money at favorable rates to make these dividend payments. It'll just be depleting its cash position, making money for preferred shareholders, not for common shareholders. The longer BTC stays depressed, the worse it is for MSTR. Middle East Tensions Add To The Uncertainty While I'm generally an optimist and hope/believe that conflicts will de-escalate quickly, the truth is, we don't really know how long things will take to play out. CBS News reported that the war can end in 2-3 weeks, according to Trump. If it lasts longer than expected, oil prices can stay high, which can cause inflation and kill any rate cut hopes. That's a negative for Bitcoin and risk assets. Many people see BTC as an inflation hedge, but when inflation was high in 2022, Bitcoin tanked, and so did MSTR. Let's be real. Bitcoin moves higher when sentiment is hot, not when inflation worries are back on the table. In the longer term, it's likely that this war will be a blip on the radar, but it's still worth considering as a short-term risk. It can make sense to wait for more clarity on the situation. Now, let's look at some of the positives. Bitcoin Chart Is At Support Bitcoin obviously moves in waves. You can see that in the chart below. We're in a big downswing that's now sitting near past levels of resistance (previous resistance is potentially becoming support). We're also near the 200-week simple moving average, which has been a good area to buy in the past. If history repeats itself, the next move will be higher eventually. BTC-USD ) Chart" width="640" height="388" contenteditable="false" data-width="640" data-height="388"> BTC-USD Weekly Chart (TradingView) Even the Fear & Greed Index of 30 out of 100, which signals fear, is a good contrarian signal. But it's also not a guaranteed signal, and I'd rather it be in extreme fear territory if I'm looking to be a contrarian. Crypto Fear & Greed Index - March 31, 2026 (coinmarketcap.com) Overall, the technical setup is positive for MSTR bulls, but given everything I said above, I'd rather wait for more confirmation of a bottom in BTC or an outright panic that leads to better prices. The Bottom Line On MSTR Stock MSTR stock is much safer now than it was when I last wrote about it in November 2024. Back then, you would have been smart to sell. Now, the move is more nuanced. It's not an obvious Buy because there's no catalyst at the moment to send shares higher (meaning MSTR will bleed cash while it waits for a rebound), and it's not an obvious sell since the valuation has come down so much. It's a wait-and-see play. That's the move now. Do absolutely nothing and be patient. MSTR is a Hold.