Time to Take Profits on Strategy Stock? 3 Reasons You Should

When the table gets hot (be it Blackjack, Poker, or a stock), it’s always wise to call it a night and take some money off the table. If you ever feel the need to constantly check stock prices throughout the day, then emotions may have taken over a sound thesis, and a position may have grown too large for its own good. That is exactly what most investors in Strategy Inc. (NASDAQ: MSTR) are feeling right now.

And they should, since the company has declined by 13.4% over the past month alone, whereas Bitcoin (the one asset it holds) has declined by only 6.2% instead. For anyone that doesn’t speak finance, this can be seen as a beta closer to 2.0, meaning whatever Bitcoin does, Strategy will match it by twice as much, if not more, when investors factor in the emotional side of a small panic.

With this in mind, there are three fundamental reasons investors may want to start to take profits on Strategy stock, no matter how enticing it is to hold for new all-time highs. Even if those highs do come around somehow, the cost investors would have to pay if they don’t is far greater than the potential reward, and that’s just bad business sense moving forward.

A Bad Foundation to Begin With

When it rains, it pours—that’s basically the Strategy business model. When Bitcoin does well, the stock will likely outperform and make everyone feel like geniuses for picking this name; however, when Bitcoin sells off (as it has done recently), the same rule applies to the losing side.

The foundation of this company explains its current situation. Originally, its primary revenue came from software development and services, which was never significant. However, CEO Michael Saylor made a strategic decision: to issue stock to raise capital—since the company wasn't profitable—and use those funds to buy Bitcoin. This approach presents a dilemma for shareholders: each new stock issuance dilutes their ownership percentage and exerts downward pressure on the stock price.

Since that money is being leveraged up to buy Bitcoin, one of the most volatile assets in the market, investors are unknowingly buying into a leveraged Bitcoin fund. This is no different than buying Bitcoin itself on crazy margins, the only difference being that the interest won’t be charged in cash, but rather in losses.

Markets Are Shifting Quickly

When the broader sentiment is risk-on, nobody can argue against a company like Strategy, since fundamentalists will be overwhelmed by the mass of hype surrounding the stock’s stellar performance. This has been the case as growth stocks in the technology sector have rallied past all other areas of the market.

That effect spills over onto other risk assets, such as cryptocurrencies; however, the tide is changing quickly. As the market begins to realize that the biggest names in the Magnificent Seven are going ex-growth, perhaps valuations are indeed too stretched, and better deals can be found in other areas instead.

The next domino to fall in this rotation is the rest of risk assets, Bitcoin included. This is exactly why prices have been falling over the past month, and why Strategy stock suffered a double loss due to its leveraged situation. As the analogy stated, the table was red hot and is beginning to cool, so maybe it’s time to go home.

When 1 Bad Apple Spoils the Whole Basket

As of early August 2025, Strategy’s CFO, Andrew Kang, decided to sell over $10 million worth of stock, which is only part of the overall $59 million sold as of the latest quarter in insider transactions. While there are some buyers (albeit much smaller ones), one bad apple is all it takes to let investors know the basket may be rotting.

This view can be directly seen in the company’s valuation metrics, specifically its price-to-book (P/B) ratio of only 2.1x. The rest of the computer sector now trades at an average P/B ratio of 9.3x, placing Strategy stock in a major discount. Some may see this as an attractive opportunity; however, that’s just not the case.

Markets typically discount companies they have no faith in, and in the case of Strategy, nobody is willing to bid its book value higher, simply because the only assets in their books are cash raised through stock dilution and Bitcoin purchased near its all-time highs.

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The article "Time to Take Profits on Strategy Stock? 3 Reasons You Should" first appeared on MarketBeat.