Strategy (NASDAQ: MSTR) formerly MicroStrategy shares are under immense pressure as investors react to a combination of weakening fundamentals.
By press time, MSTR stock was trading at $157, down 11% for the day. Over the past month, the equity has suffered massive losses, plunging 40%.
MSTR one-week stock price chart. Source: FinboldWhy MSTR stock is plunging
The steep decline followed remarks from CEO Phong Le, who acknowledged that the company could sell part of its Bitcoin (BTC) holdings if specific conditions are met. He outlined two triggers: a scenario where Strategy’s share price falls below its market-implied net asset value, and a situation in which the firm can no longer raise capital through its usual channels.
The possibility of a Bitcoin sale marks a significant departure from the company’s long-standing stance of holding its cryptocurrency reserves indefinitely, unsettling investors who viewed that commitment as central to its identity and valuation.
Investor concerns deepened further after the company established a $1.44 billion cash reserve, intended to secure dividend payments and meet future obligations. While presented as a proactive financial safeguard, the move was widely interpreted as a sign the company is preparing for a more challenging environment, especially as Bitcoin continues to struggle below the $90,000 mark.
The stock’s decline also mirrors ongoing weakness in the broader cryptocurrency market. Strategy’s valuation has become increasingly tied to Bitcoin’s performance, leaving its shares vulnerable when digital-asset prices fall. With Bitcoin under renewed pressure, the company’s leveraged exposure has exacerbated the sell-off.
Notably, the slump has dragged the company’s market capitalization down to roughly $45 billion, placing it below the value of its massive Bitcoin reserves.
Strategy’s Bitcoin holding
Strategy currently holds 650,000 Bitcoin, worth about $55 billion at current market prices. Despite a week without adding to its position, the company disclosed on Monday that it purchased an additional 130 Bitcoin for $11.7 million, funded through the issuance of common shares.
The numbers highlight an unusual disconnect where Strategy’s market cap is now about $10 billion below the value of its Bitcoin holdings. After accounting for $8.2 billion in debt, its net Bitcoin assets stand at $46.8 billion, still $1.8 billion above its current valuation, excluding cash.
This growing gap reflects investor concerns over Strategy’s leveraged Bitcoin strategy, crypto market volatility, and doubts about how long the company can continue expanding its Bitcoin position.
Featured image via Shutterstock
Source: https://finbold.com/why-strategy-mstr-stock-is-crashing/
