Bitcoin is another rough day in the markets down almost 3% to $98,600, helping to push the largest BTC holding company, Strategy (MSTR), down 6.6%.
Now trading at $210, MSTR has returned to levels not seen since the weeks before Donald Trump’s election last November. Shares are down 30% year-to-date and 36% year-over-year, although they remain massively higher since Michael Saylor and his team adopted a Bitcoin cash strategy in August 2020.
The strategy’s fall relative to the price of bitcoin has prompted some on social media to declare the stock in buy territory due to its market cap now being significantly lower than the value of its BTC stack, i.e. an mNAV less than 1.
Indeed, Strategy’s 641,692 bitcoins are worth $63.2 billion, about 5% more than the current market cap of $60 billion. This calculation, however, leaves out all of the company’s preferred and debt issues, both of which have a higher redemption preference than common stock.
Adding these elements brings the strategy enterprise value at $75.4 billion, almost 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 the time of publication.
Strategic common stock may turn out to be cheap or perhaps expensive, but it does not – at current levels – change hands at a price lower than the company’s bitcoin.
