Down More Than 60% From Its High, Has Strategy Become a Cheap Stock?

Core Viewpoint - The stock of Strategy has been experiencing a significant decline, losing over 60% from its 52-week high, primarily due to its heavy reliance on Bitcoin, which has also been underperforming in the market [1][2]. Group 1: Stock Performance - Strategy's stock has fallen more than 50% in the past six months, correlating closely with Bitcoin's price movements [1][2]. - As of the latest trading session, the stock price is $178.99, down from a 52-week high of $457.22 [2][7]. - The company's market cap stands at over $50 billion, despite generating less than $500 million in revenue over the trailing 12 months, indicating a high valuation relative to its revenue [6][7]. Group 2: Financial Dependence on Bitcoin - Strategy reported unrealized gains on digital assets totaling $12 billion in the first nine months of the year, while its revenue during the same period was only $354 million [4]. - The company's financial performance is heavily influenced by the volatility of its Bitcoin holdings, making its earnings unpredictable [5][9]. Group 3: Valuation Concerns - The price-to-earnings (P/E) ratio of seven may suggest that Strategy is undervalued, but the extreme volatility of its earnings complicates this assessment [5]. - Trading at over 100 times its revenue, the valuation appears excessive, especially for a company not experiencing significant growth [6]. Group 4: Investment Risks - Strategy is characterized as a highly speculative stock, with its performance more akin to a meme coin than a traditional stock, lacking strong fundamental ties [9][10]. - The core business has been declining for multiple years, and the earnings quality is low, heavily dependent on the fluctuating value of digital assets [9].