Summary MicroStrategy (MSTR) has seen its Bitcoin-as-a-Treasury strategy falter, eroding the premium that has fueled rapid BTC accumulation via equity issuance. MSTR's market-adjusted net asset value (mNAV) has declined to 1.07, making further equity issuance more dilutive and less accretive for BTC purchases. The 10% Series A Perpetual Stride Preferred (STRD) offers substantial income with clearly defined risks, though coupon suspension remains a remote concern. Strategy's ( MSTR ) Bitcoin-as-a-Treasury ("BaaT") business model has dramatically imploded on the back of a 58% decline over the last 1-year. This has broadly eliminated an inherent tentpole premium that has formed a currency for MSTR's rapid accumulation of BTC since a sleepy enterprise software company operating out of Tyson's Corner, Virginia, decided to buy and hold BTC on its balance sheet in the summer of 2020. This new zeitgeist represents MSTR's most intense stress test. It could really come to represent a permanent step change in the company's prospects, a rollback of the highly lucrative BTC accumulation strategy that allowed the constant issuance of new common equity to buy BTC. This strategy has been ruthlessly effective, allowing MSTR to increase its BTC holdings to 712,647 as of its most recent dashboard update. Strategy Business Wire Strategy This is valued at $63.64 billion with BTC currently trading for roughly $89,294. Critically, with MSTR's enterprise value at $68.21 billion, the company's market-adjusted net asset value ("mNAV") has dipped to 1.07. This captures MSTR's enterprise value in relation to the value of its BTC holdings. A figure greater than 1x means the company can sell its common shares through its at-the-market offering program at a cadence that optimises its BTC yield. This yield is a measure of the percentage change in BTC owned per share in comparison to the ramp-up in shareholder dilution. MSTR's BTC yield since the start of 2026 is currently running at 0.4% , just 40 basis points above zero. This is markedly lower than a BTC yield through 2025 that came in at 22.8%. The company closed out 2024 with a BTC yield of 74.3% . I last covered MSTR with a hold rating. Strategy Beyond A Future Crypto Winter And The Non-Cumulative Perpetual Stride Preferreds Data by YCharts Data by YCharts MSTR's weighted average common shares outstanding have increased by 148.8% over the last three years, an annual pace of dilution of just under 50% per year. Critically, the company's strategy made sense when this pace of dilution was completed at a BTC yield of 74.3%. The impact of diminishing mNAV is one where MSTR's core investment proposition is fundamentally eroded. The worst-case scenario for the company centers on a possible prolonged BTC winter being paired with an mNAV that's below 1x. MSTR is planning for this scenario, and in December, updated the market that it had built a $2.2 billion cash buffer to support the continued payment of the coupon payments on its preferreds. MSTR faces annual dividend payments of at least $880 million on its universe of preferreds. QuantumOnline Seeking Alpha This sets up the company's 10.00% Series A Perpetual Stride Preferred Stock ( STRD ) as a possible investment at its current level. These are currently swapping hands for $72.83 per share, an 27% discount to their $100 per share liquidation value. However, this discount does not matter as much. They're perpetual and not callable. Hence, the probability of MSTR redeeming these at their liquidation value is near-zero. The uncertainty is whether the company can continue to meet the annual $10 per share coupon payments. The cash reserves mean MSTR has at least two and a half years of coupon payments, which places its 13.7% current dividend yield in focus. However, they're non-cumulative and were sold at $85 per share when they IPOed, a discount of 15% to their liquidation price. I considered these versus ( STRK ), which pays out an $8 per share annual coupon for a 9.4% current yield. They're also cumulative and trade higher at $85 per share due to this feature. However, I view the risk of a coupon suspension on the non-cumulative STRD as extremely low. Seeking Alpha STRD is the only one of MSTR's outstanding preferreds that are non-cumulative, which does amp up their risk profile. This is compounded by the company's lack of cash flow, with MSTR's currency lying entirely with the value of its commons and preferreds. The company needs to be able to continue to issue these to maintain a going concern with its BaaT strategy. This strategy would fall apart if, after 2.5 years of a BTC winter, MSTR suspends STRD's coupon. I'd view such a move as triggering significant cross-selling, spiking yields across its capital stack, and tanking demand for its preferreds. This would limit the company's access to the depth of institutional capital needed to maintain BTC purchases. Conclusion MSTR's ongoing selloff is either a more permanent reorientation of capital away from the ticker or a transient disallocation that could represent a buying opportunity for BTC bulls. I keep my rating as a hold. Bears would be right to state that even if BTC does expand, the company's mNAV could still trade on the narrower premium it currently does versus its historical average. This would limit overall upside on the commons. STRD provides bulls a way to earn an income with limited risk of a suspension through to 2028. MSTR has also stated that it will liquidate its BTC holdings to maintain its coupon payments in the event its mNAV dips below 1x. This cash reserve, BTC holdings, and continued access to liquidity keep MSTR rated as a hold.
