Despite purchasing billions of dollars worth of Bitcoin, MicroStrategy's stock (#MSTR ) has still plummeted, down 45% from its peak in November, raising questions among investors about the company's strategy.

The price drop journey of MSTR stock

  • In November 2024, MicroStrategy's stock peaked at $543, but is now only $300 (down 45%).

  • Despite Bitcoin's price $BTC rising sharply over the past year, MicroStrategy's stock has not maintained its previous allure.

Bitcoin Strategy: Benefit or Harm?

MicroStrategy is the world's largest holder of Bitcoin, with a total of 446,400 BTC worth $43 billion. Recently, they continued to purchase an additional $200 million worth of Bitcoin, but this is the smallest purchase since August 2024.

The company has utilized financial tools such as:

  • A $7.3 billion convertible bond to raise capital for purchasing Bitcoin.

  • This helps increase the amount of Bitcoin held but simultaneously increases financial risk, causing investor hesitation.

MSTR stock: Is the 'Bitcoin leverage' no longer attractive?

  • According to MSTR Tracker, the stock #MicroStrategy is currently trading at 1.6x the value of Bitcoin assets, significantly down from the peak of 3.4x in November.

  • The stock price once outperformed Bitcoin, increasing by 334% in 2024 (compared to Bitcoin's 116% increase), but investors no longer 'buy the story' that MicroStrategy is a more effective way to invest in Bitcoin.

Negative signals from the market

  • Citron Research, a well-known investment organization, has publicly disclosed its short position on MSTR stock, while maintaining a long position in Bitcoin, arguing that the stock price has 'drifted too far' from the actual value of the asset #bitcoin .

  • Analysts from 10X Research believe that:

    "Investors have become more rational, no longer supporting the valuation of MSTR stock far exceeding the fundamental value of Bitcoin."

Rare bright spots

Despite facing significant pressure, MicroStrategy has still achieved some milestones:

  • Added to the Nasdaq-100 index, helping the stock reach large investment funds.

  • This move could bring in billions of dollars in capital from Nasdaq-100 tracking ETFs.

Conclusion

The decline in MicroStrategy's stock reflects a loss of confidence in the high-leverage Bitcoin investment strategy. However, being the largest holder of Bitcoin remains a bright spot. Will MSTR stock recover in 2025 when Bitcoin prices are forecasted to rise? This will be a question worth monitoring in the near future.