Shares of Strategy (NASDAQ: MSTR), formerly known as MicroStrategy, fell on Thursday. The company's stock lost 8.8% as of market close and was down as much as 12.7% earlier in the day. The steep decline outpaces the S&P 500's (SNPINDEX: ^GSPC) and Nasdaq Composite's (NASDAQINDEX: ^IXIC) worst single-day drop in years.
President Trump's sweeping tariff announcement has sent shock waves through the market, especially affecting riskier assets like Strategy.
Trump announces new tariffs
Strategy is feeling the pressure after President Trump's announcement of far-reaching new tariffs on nearly all U.S. trading partners. The extensive package includes a 34% tax on imports from China, 20% on the European Union, and a 10% baseline tax on all countries, representing what economists are calling the most significant disruption to global trade in nearly a century.
The tariffs are now being met with retaliatory tariffs from major partners that will greatly impact the ability of U.S. companies to sell outside the country. World leaders are also openly discussing an economic future that exists outside the U.S. as its leader and central figure. Investors are, rightfully, concerned a recession could be coming.
A bold strategy
Strategy transitioned from a business intelligence company to a Bitcoin accumulation company. The company now lives and dies on the price of Bitcoin and its future prospects. In the wake of the tariffs, riskier assets like Bitcoin and other cryptocurrencies were hit hard. Bitcoin is down more than 5% from just before the tariffs were announced.
The new strategy has led the company to take on significant debt in order to build its Bitcoin reserve. I'm deeply skeptical of the companies plan and would avoid Strategy, even if any major economic issues from these tariffs are avoided.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
