Strategy Plunges 59% in 6 Months: Should You Hold or Fold the Stock?

Core Insights - Strategy (MSTR), the largest corporate Bitcoin holder, has experienced a stock decline of 59.3% over the past six months, underperforming the Zacks Financial – Miscellaneous Services industry's 15.2% decline and the broader Finance sector's 8.3% increase [1][3][7] - Concerns regarding MSTR's premium valuation and sensitivity to Bitcoin volatility have contributed to its stock decline, alongside unrealized losses of $17.44 billion in Bitcoin holdings [2][7] - MSTR's forward price-to-sales ratio stands at 100.63X, significantly higher than the industry average of 3.01X, raising overvaluation concerns [5][7] Stock Performance - MSTR's stock has significantly lagged behind peers, with Hut 8 Corp. gaining 179.5% and Riot Platforms increasing by 37.2%, while Coinbase Global Inc. fell by 41.7% during the same period [1][3] - The stock's performance reflects a combination of high valuation and market volatility, leading to a Value Score of F [5][7] Financial Strategy - MSTR has raised nearly $20 billion through preferred offerings to fund Bitcoin accumulation, which has helped maintain steady earnings [7][10] - The company has broadened investor access through digital credit instruments, reducing reliance on convertible debt and enhancing balance-sheet flexibility [9][10] Bitcoin Accumulation - As of mid-January 2025, MSTR holds approximately 687,410 BTC, reinforcing Bitcoin as its primary treasury reserve asset [11] - The company’s strategy focuses on continuous, policy-based accumulation of Bitcoin rather than opportunistic buying, controlling over 3% of the global Bitcoin supply [11] Market Conditions - Favorable structural tailwinds, such as greater regulatory clarity and expanding institutional adoption through Bitcoin ETFs, have improved liquidity and reduced volatility, supporting MSTR's long-term growth prospects [12] - Analyst forecasts indicate a steady earnings outlook, with the consensus estimate for first-quarter 2026 earnings at $5.81 per share, a significant improvement from a loss of $16.49 per share in the prior year [13] Conclusion - Despite the sharp decline in stock price, MSTR's long-term growth narrative remains intact, supported by disciplined Bitcoin accumulation and innovative capital-raising strategies [16] - Maintaining a hold position is justified for long-term-oriented investors, balancing near-term risks with future upside opportunities [16][17]