Michael Saylor’s MSTR Is Down, but Maybe Not as Cheap as Thought

Another difficult day in markets has bitcoin BTC$98,913.15 lower by nearly 3% to $98,600, helping to drag down the largest corporate holder of BTC, Strategy (MSTR), by 6.6%.

Now trading at $210, MSTR has returned to levels not seen since the weeks prior to the election of Donald Trump last November. Shares are lower by 30% year-to-date and 36% year-over-year, though remaining massively higher since Michael Saylor and team adopted a bitcoin treasury strategy in August 2020.

The plunge in Strategy relative to the price of bitcoin prompted some on social media to declare the stock in buy territory due to its market cap now being sizably below the value of its BTC stack, i.e. a so-called mNAV below 1.

Indeed, Strategy’s 641,692 bitcoin are worth $63.2 billion, or about 5% more than the current market cap of $60 billion. This calculation, however, leaves out all of the company’s preferred and debt issuance — both of which have higher payback preference than the common stock.

Adding those items brings Strategy’s enterprise value to $75.4 billion, or nearly 20% more than the value of its bitcoin holdings — numbers made clear on Strategy’s own dashboard, which showed an mNAV of 1.19 at press time.

Strategy common stock may turn out to be cheap or maybe expensive, but it is not — at current levels — changing hands at a discount to the company’s bitcoin.