Strategy's flagship securities MSTR and STRC took a hit in value, dropping by 30% and 18% respectively during the week. This has raised concerns about the company's capital allocation strategy, particularly its reliance on issuing new shares to acquire more Bitcoin.
The multiple net asset value (mNAV) of Strategy's flagship securities fell below the key threshold of 1.22x, which management had identified as the level at which issuing new MSTR shares remains accretive. This has sparked speculation that Michael Saylor may need to adjust his strategy if market conditions persist.
Crypto analysts have weighed in on the situation, with some arguing that MSTR stock is now undervalued and represents a buying opportunity. Fred Kruger noted that investors can get discounted exposure to Bitcoin through MSTR, which currently trades at 0.6 times its underlying Bitcoin holdings.