MicroStrategy ($MSTR (-7,42 %) ) remains an uncertain and inefficient way to invest in Bitcoin. While the company is often seen as a kind of leveraged Bitcoin vehicle, the share price performance shows that MSTR corrects downwards disproportionately during volatile market phases. Since mid-December 2024, the share has lost around 40% in value, while Bitcoin has only fallen by around 20% in the same period (leverage in both directions). A comparison of MSTR's high of USD 543 in November 2024 with the current price of USD 255 even shows a decline of 55 %, while Bitcoin has only fallen by 10 %. This extreme difference shows that the share is anything but an efficient way to participate in the Bitcoin price in the long term. Short-term trades on rising prices can still make sense in comparison.
Despite the massive price decline, MSTR remains highly valued. The company holds around 500,000 Bitcoins with a current market value of around USD 42.2 billion (at a Bitcoin price of USD 84,500). At the same time, however, the balance sheet also includes around USD 7 billion in debt. If these liabilities are deducted from the Bitcoin holdings, a net asset value of USD 35 billion remains for the shareholders. Nevertheless, the share is traded at a market capitalization of USD 66 billion - this corresponds to a premium of around 90% on the real net asset value. In other words, investors are currently paying almost double the actual value and speculating that Bitcoin will at least double in the coming years just to justify the current valuation level.
Another problem is MicroStrategy's capital structure. In the past, the company has repeatedly been able to issue favorable convertible bonds, which offer low interest rates but entail subsequent dilution for shareholders. One example: In September 2024, a USD 1.01 billion convertible bond was issued with a conversion price of USD 183.19 per share. If these bonds were to mature today, the number of shares outstanding would increase by around 5 million - a significant dilutive effect.
In addition, it is becoming increasingly difficult for MicroStrategy to raise fresh capital on attractive terms. While new bonds have been issued repeatedly in the past, it is unclear whether investors are still willing to finance the company at current interest rates. To justify its current stock market value, MicroStrategy would theoretically have to raise debt in the region of USD 75 billion - an unrealistic scenario. Even the last capital increase in November 2024 with a conversion price of over USD 660 was a bad deal for investors, as the share price is now USD 255.
The Bitcoin market itself could also come under pressure in the coming months, resulting in a strong negative price loss due to leverage.
Conclusion: I'm staying away and investing sustainably in Bitcoin!
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