Summary MicroStrategy remains fundamentally overvalued despite a 75% decline from its 2024 peak. MSTR's business model lacks a compelling value proposition versus Bitcoin ETFs, especially as its debt-driven strategy faces diminishing returns. With a market cap still at a premium to net asset value, MSTR's risk profile worsens if Bitcoin prices fall further. Retail investors should reconsider MSTR exposure and favor direct Bitcoin vehicles for long-term crypto allocation. I’ve been a vocal bear on Strategy Inc ( MSTR ) since 2024: MicroStrategy: Bubble Popped Once, Going To Pop Again? (published on December 10 2024). Author Previous Coverage (Seeking Alpha) Strategy (MicroStrategy): Collapses With Bitcoin Drop, Still Grossly Overvalued (published on March 3 2025). Author Previous Coverage (Seeking Alpha) MSTR has been down substantially since those two articles. Despite MSTR being down around 75% since its peak of $543/share in November 2024, I am still very bearish. This article will discuss why I still suggest not buying the dips and perhaps even consider selling existing positions (and rolling over into other Bitcoin products, such as ETFs, if one is still bullish on Bitcoin). MSTR Stock Price (Seeking Alpha) MSTR’s business model is inherently flawed In my previous articles, I argued that MSTR’s business model is flawed . I still maintain the same view. An investor’s view of Bitcoin’s investment and future price trajectory is one thing (which I will discuss in a section below), but the value proposition in MSTR’s business model is a wholly separate matter. If an investor is bullish on Bitcoin, he can buy a Bitcoin ETF, or if he is very adventurous, he can buy some leveraged Bitcoin product. Why does MSTR offer what isn’t already offered by dozens of ETFs and Bitcoin trading exchanges? Based on my previous analysis, MSTR does not offer enough (if any) additional value proposition to support buying MSTR rather than the myriad other ways to gain exposure to MSTR. When I initiated my bearish coverage in December 2024, many bulls were skeptical of my conclusion. Now that MSTR is down 75%, I’m still seeing a lot of bullishness, which I believe is unjustified. So what does MSTR offer? Its main uniqueness is its use of leverage creatively for purchasing Bitcoin. A major selling point that Michael Saylor used to justify MSTR’s value is that MSTR was able to issue bonds at very advantageous terms. I was skeptical of this in 2024 – at that time, my view was that even if MSTR can issue a few billion dollars at advantageous terms in an exuberant market, this does not mean MSTR can replicate this at scale. The market was essentially valuing MSTR as if it could issue a huge amount of convertible notes at a low interest rate for a very high strike price on MSTR stock (I estimated was needed to justify MSTR’s prior market cap). MSTR is essentially a transfer of value from exuberant bond/note/preferred share holders to common share holders, but I seriously doubted how much value MSTR could transfer at scale. As it turns out, MSTR has not issued a long-term note since February 2025, as shown below from MSTR's full-year 2025 SEC filings . MSTR long-term liabilities (SEC) Instead, MSTR issued preferred shares in 2025 at 10% annual interest rates when Management was emphasizing their low-interest model as their unique value proposition. It seems like issuing 0% bonds at a massive scale never came to fruition. MSTR preferred shares (SEC 10-K filing) Still overvalued if you look beneath the hood Certain analysts might say that MSTR is a lot less overvalued than it was a year or two back and point to its multiple of NAV being close to 1 now. But if we look under the hood, MSTR is still overvalued. Here’s why. MSTR NAV multiple (online) MSTR’s main assets are its Bitcoin holdings of 717k Bitcoins worth about $49 billion. Per the 2025Q4 financials, I summarized the following: MSTR's balance sheet and Bitcoin breakeven price points As of December 31 2025 Amounts in USD Bitcoin breakeven price Cash $2.3bn Long-term debt $8.2bn Debt, net of cash $5.9bn $8200 to cover debt net of cash ($5.9bn/717k bitcoins) Preferred shares $6.9bn Debt+preferred shares, net of cash ~$12.8bn $17,800 to cover debt + preferred shares, net of cash ($12.8bn/717k) Source: MSTR 10-K filing. MSTR has long-term debt of $8.2 billion (let’s assume the other liabilities are minimal, the main other liability is deferred tax liabilities, which probably are less of an issue if MSTR does not plan to sell its positions any time soon. In any case, deferred tax liabilities have probably shrunk since Bitcoin’s price decline in YTD-2026). So MSTR has net assets of about $43 billion (49-8+2). MSTR’s market cap is $43 billion, so per this calculation, it is trading near net asset value. However, I think it would be more conservative to view the preferred shares as debt, and if we use the mezzanine equity figure of $6.9 billion, then the total long-term debt plus preferred shares partially offset by cash of $2.3 billion is roughly $13bn (8.2+6.9-2.3), further reducing net assets to about $36 billion. In this calculation, MSTR’s market cap would be at a premium to the NAV of 19%. Now, Management's own calculations are that MSTR can still cover its debt if Bitcoin falls to $8,000 . However, it appears they are defining debt as only those items classified as debt on the balance sheet. MSTR has to pay much of these liabilities in the next few years, assuming Bitcoin prices do not surge and its noteholders do not convert into shares, then $6.4 billion will come due in 2028. Long-term Liability Redemption Schedule (SEC Filing) Per my calculations, if Bitcoin falls another 75% (i.e., falling to $17.8k/coin), MSTR’s net assets will plummet to $0 billion, MSTR will be underwater, i.e., its assets will be insufficient to cover its liabilities. My calculation considers the potential liability from preferred shares. To be clear, technically, MSTR only has to redeem these preferred shares in very limited and extraordinary scenarios (namely, those events defined as Fundamental Change ( source ), which essentially is MSTR or its assets being acquired by someone else), so MSTR does not have to redeem them solely because the price of Bitcoin fell. However, I view them as part of the "debt" calculation, as these preferred shares need to be repaid before common shareholders see anything, hence I arrive at $17.8K as the breakeven point. Before the reader suggests that it couldn’t happen, as the recent 6 months have shown us, Bitcoin can go down pretty fast for no obvious reason. In fact, Bitcoin has been through several boom and bust cycles already. This also does not help MSTR’s story, as this reduces investors' risk appetite in this field. The investor who lent MSTR money in 2024 at 0% interest rates is likely underwater now (and probably regretting their investment). My view on Bitcoin My latest coverage on Bitcoin was a somewhat bullish piece in August 2025 based on the anticipation of the Fed easing monetary policy. However, as I always advocate an unleveraged investment, my time horizon is very long – my initial bullish coverage in gold/silver was 3 years before the price went up in earnest. I still believe Bitcoin can provide value as an alternative to fiat currencies, which do not offer much confidence these days. However, this could take years to play out. Bitcoin might be a viable alternative asset, but there’s no reason to punt on it, and purchasing MSTR seems more of a bet that Bitcoin will go up very soon and MSTR will continue to be able to raise large amounts of capital at advantageous terms rather than a long-term investment in Bitcoin. Even some best-performing investments (such as Big Tech stocks or, more recently, gold and silver) have had extended periods of lackluster performance. Gold’s recent bull move was after over a decade of going nowhere. Risks to bearish thesis Now Bitcoin goes up and down. Perhaps Bitcoin begins another bull move, and MSTR stock price could surge again. MSTR has had many ups and downs over the years, and anything’s really possible for this company. Conclusion In fact, the only big winner from MSTR so far appears to be the original shareholders at the start. In August 2020, MSTR owned 20k Bitcoins, and it had a market cap of $1 billion. After all the hype of the past few years, MSTR has substantially increased its net assets by issuing stock, so now the shareholders in 2020 own MSTR stakes that are worth billions of dollars. MSTR Market Cap (Companies MarketCap) To be clear, I’m not saying anything improper has happened. From all I’ve seen above, I don’t see any improprieties per se, but retail investors should be cautious when they can’t see where the value is coming from. In MSTR’s case, it looks to me like retail investors who bought into MSTR’s story got their value transferred to whoever initially owned MSTR because they believed a story that was probably too good to be true. So I think retail investors should learn from the underperformance of MSTR in the past two years and seriously consider whether it has any additional value proposition, and if not, then just stick with a simple Bitcoin ETF if they want to invest in Bitcoin for the long run.
