Strategy (MSTR) Fire Sale: Should you Buy?

Zacks Rank #3 (Hold) Strategy (MSTR) is the first and largest Bitcoin Treasury company. Below are some of the reasons I am bullish into year-end:

Strategy NAV is its Lowest in History

Because Strategy is primarily a Bitcoin treasury company rather than a revenue-based company, investors must view it differently than most equities. Net Asset Value, or NAV, is the most optimal way to value MSTR shares. NAV is a critical financial metric to monitor when analyzing a Bitcoin treasury stock like Strategy. In Strategy’s case, NAV represents the market value of its massive Bitcoin hoard, its software business, minus its debt, divided by the number of shares. Historically, MSTR’s NAV has traded between 1.50x and 2.45x. However, currently, MSTR’s NAV of 1.10x is its lowest in history.

MSTR's Forced BTC Selling Fears are Overblown

Bitcoin skeptic and “gold bug” Peter Schiff, along with others, has suggested that Strategy is a fraud and will be required to sell Bitcoin. However, a sizable forced selling is unlikely to occur soon, as Strategy recently raised nearly $1.5 billion by selling its own stock. Additionally, Saylor and MSTR are known for their long-term Bitcoin bullish thesis. Volatility is nothing new for the stock. In fact, in 2023, MSTR’s drawdown from its peak reached 90% before recovering all the losses. Volatility is a feature, not a bug, as without risk, MSTR’s 390% return over the past five years would be impossible. Meanwhile, MSTR has a market cap of just $45 billion while its BTC holdings are $55 billion. Any rally in Bitcoin should trigger a massive relief rally in MSTR shares, as the two are highly correlated.  

Investors are Fearful Over Crypto

The “Coin Market Cap Fear and Greed Index” is a powerful tool that analyzes crypto sentiment. Late last month, the CMC Fear and Greed Index reached extreme fear levels, signaling the highest level of fear in more than two years.

As the old saying goes, investors should “be greedy when others are fearful.”

MSTR: High Probability Technical Zone

Finally, MSTR is reaching a critical confluence zone from a technical perspective. The stock has retraced to the 2025 breakout zone (an area of demand), is at max oversold levels, and showed a hammer candle yesterday (indicating bulls are stepping in).

Bottom Line

While Strategy remains a polarizing stock, many of the most significant risks appear priced in already. The combination of a historical NAV discount, panic-driven sentiment across crypto, and strong technical support provides a compelling rebound setup.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research