What You Need to Know

• The market valuation of Strategy (MSTR) has plummeted to 1.80, nearing its 12-month lows, impacting its ability to raise equity without considerable dilution.
• Recently, Strategy’s method of acquiring Bitcoin has changed, with 81.7% of funding coming from common stock, 15.9% from STRK, and 2.4% from STRF, which indicates a broader use of hybrid investments.

Since beginning this month, a notable divergence has surfaced between Bitcoin and Strategy. While Bitcoin has increased by roughly 13%, approaching the $110,000 milestone, MSTR shares have declined by 3%, roughly trading around $372.

This gap in performance has intensified since mid-May, raising concerns regarding market sentiment towards Strategy, the pioneer of corporate Bitcoin treasury strategies. Despite its pioneering role, the company’s stock has failed to keep pace with Bitcoin’s recent uptrend.

A significant factor in this scenario is the surge in the number of public firms adopting similar Bitcoin strategies. According to data from BitcoinTreasuries.net, more than 113 public companies now possess Bitcoin on their balance sheets, incorporating 11 new players in just the last month.

Many seem to emulate Strategy’s approach, but the diminishing market premium suggests that its initial competitive edge might be diminishing. The company’s multiple to net asset value (mNAV) has dropped to 1.80, one of its lowest rates over the previous year. This figure is computed by dividing the enterprise value (EV) by the market value of its Bitcoin holdings, including MSTR’s market cap and preferred shares, minus the latest reported cash balance.

A reduced mNAV restricts Strategy’s capacity to issue new equity without significantly impacting existing shareholders, although it still remains above 1x, maintaining some leverage.

The latest acquisition of 4,020 BTC, financed not just through common stock but also preferred securities—81.7% from common stock, 15.9% from STRK, and 2.4% from STRF—highlights a pivotal alteration in funding strategy, according to MSTR analyst Ben Werkman.

This diversification indicates that the firm is strategically utilizing alternative financial instruments through its at-the-market (ATM) offering, likely aiming to limit shareholder dilution and optimize capital raising in a challenging mNAV landscape.

Read more: Strategy Buys 4,020 Bitcoin for $427M, Bringing Total Stash to Over 580,000 BTC