NEW YORK / LONDON (IT BOLTWISE) – MicroStrategy (MSTR) shares have come under pressure due to recent Bitcoin volatility. Despite a 6.6% decline, the company’s valuation remains controversial as its market capitalization is below the value of its Bitcoin holdings. Experts debate whether the stock is a bargain or overvalued.
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MicroStrategy (MSTR) shares have seen a significant decline over the past few days, driven by recent volatility in the Bitcoin market. Bitcoin price fell nearly 3% to $98,600, which also dragged shares of MicroStrategy down 6.6%. This development has reignited discussion about the company’s valuation, as MicroStrategy is known as the largest corporate holder of Bitcoin.
MicroStrategy currently holds 641,692 Bitcoin, worth about $63.2 billion. Interestingly, the company’s current market cap is $60 billion, which has led some investors to view the stock as undervalued. However, this assessment does not take into account the company’s debt and preferred stock, which must be considered in a full valuation.
MicroStrategy’s debt and preferred stock push the company’s value to $75.4 billion, meaning the stock isn’t actually trading below the value of its Bitcoin holdings. This complex financial structure has resulted in an mNAV (modified net asset value) of 1.19, suggesting the stock may not be as cheap as some investors believe.
Michael Saylor, the CEO of MicroStrategy, has aggressively pushed the company’s Bitcoin strategy since August 2020. This strategy has caused the company’s shares to rise significantly since then, despite recent setbacks. However, the long-term impact of this strategy on company valuation remains controversial as Bitcoin’s volatility continues to play a significant role.
The discussion about MicroStrategy’s valuation is further fueled by the uncertainties in the cryptocurrency market. While some investors view the stock as a long-term investment that could benefit from Bitcoin’s future performance, others see the risks associated with its high reliance on a volatile asset class. These different perspectives make the stock an exciting topic for market observers and investors alike.
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