Strategy Plunges to Weakest in 13 Months, but Still Trades at Premium to Bitcoin Holdings
Bitcoin dropped nearly 3% to $98,600, impacting MicroStrategy's (MSTR) stock, which fell 6.6% to $210. MSTR shares have decreased 30% year-to-date and 36% year-over-year, despite significant gains since adopting a bitcoin treasury strategy in August 2020. While MSTR's bitcoin holdings are worth $63.2 billion, higher than its market cap of $60 billion, including debt and preferred equity raises its enterprise value to $75.4 billion, exceeding bitcoin holdings by nearly 20%. This shows the company’s stock isn't trading at a discount to its bitcoin asset value.
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Bitcoin and Market Performance
Another difficult day in markets has Bitcoin (BTC) lower by nearly 3%, dropping to $98,600. This decline has also impacted MicroStrategy (MSTR), the largest corporate holder of BTC, which fell by 6.6% to $210.
MicroStrategy's Price History
At its current price of $210, MSTR has returned to levels not seen since the weeks prior to the election of Donald Trump last November. Its shares have dropped 30% year-to-date and 36% year-over-year, though it still remains significantly higher since the company adopted its Bitcoin treasury strategy in August 2020.
Market Cap and Bitcoin Valuation
The decline in MicroStrategy's stock price relative to Bitcoin's value has led some social media users to declare the stock as being in buy territory. The company's market cap is now sizably below the value of its Bitcoin holdings, with a so-called mNAV (Market Net Asset Value) below 1.0.
MicroStrategy's Bitcoin Holdings and mNAV
MicroStrategy currently holds 641,692 Bitcoin, valued at $63.2 billion, which is about 5% more than its current market cap of $60 billion. However, this calculation does not account for preferred shares and debt issuance, which have higher payback precedence compared to common stock.
Enterprise Value Analysis
When factoring in preferred shares and debt issuance, MicroStrategy's enterprise value rises to $75.4 billion, nearly 20% more than the value of its Bitcoin holdings. This was highlighted on the company's own dashboard, showing an mNAV of 1.19 at the time of reporting.
Stock Value Assessment
While MicroStrategy's common stock may appear cheap or expensive, its current valuation does not reflect a discount to the company's Bitcoin holdings, based on enterprise value calculations.