MSTR stock price eyes a crash to $100 as dilution accelerates

The MSTR stock price continued its recent decline as Bitcoin retreated after the company announced its latest purchase.

Summary

• The MSTR stock price has been in a strong freefall this year.
• Strategy bought 1,229 Bitcoins using cash it raised by selling shares.
• Its mNAV multiples have slumped to a record low.

Dilution continues as Strategy buys 1,229 Bitcoins

Michael Saylor’s Strategy tumbled to a low of $156, down sharply from the year-to-date high of $457. It has moved to its lowest level since September last year and ~65% below its highest point this year.

Strategy is facing headwinds, with the falling Bitcoin (BTC) price being the most significant. Bitcoin has declined to $87,275 and has formed numerous bearish patterns, suggesting a potential retreat to $80,000 or below. Such a drop will hurt MSTR, as the company holds over 672,000 coins today. 

Strategy’s other primary concern is that the premium it enjoyed for years has now disappeared. Data compiled by Bitcoin Treasuries show that the mNAV based on its market cap fell to 0.778, while the one based on its enterprise value became negative for the first time.

A dropping mNAV multiple means that the company has become a bargain as its Bitcoin holdings are worth more than the whole company. However, the risk is that it will make it hard for the company to raise cash through convertible bonds.

Strategy has continued to dilute existing shareholders through its at-the-market offerings. In a statement on Monday, the firm said that it bought 1,229 coins last week. It did that by selling shares worth $108.8 million. 

The company still has $11.6 billion that it can raise by selling shares in the current ATM authorization. Therefore, holders can expect to be diluted further over time. Its common outstanding shares have jumped to 267 million from less than 80 million a few months ago.

MSTR stock price technical analysis 

Strategy stock chart | Source: TradingView

The weekly timeframe chart shows that the MSTR share price has crashed in the past few months, as buyers remained in the sidelines.

It formed a double-top pattern at $457 and a neckline at $234. It has moved below the 50-week and 100-week Weighted Moving Averages, which are about to form a bearish crossover.

The stock has already moved below the 61.8% Fibonacci Retracement level, while oscillators have continued moving downwards. Therefore, the most likely Strategy stock forecast is bearish, with the next target being at $100.