Strategy's (MSTR) enterprise multiple to net asset value (mNAV) has officially fallen below 1.
It's an unfamiliar position for the Michael Saylor-led company, as investors had valued the firm for years at well above its bitcoin holdings, giving Strategy massive flexibility to raise capital as needed — a situation that Saylor and team took full advantage of.
But with the stock having declined to around $82, approximately 85% below its November 2024 all-time high, enterprise value has fallen to about $50.4 billion. Bitcoin holdings, meanwhile, are worth around $51.1 billion at the current $60,000 price. The market is now valuing the entire enterprise at less than the value of the bitcoin it owns. At these levels, issuing new shares becomes dilutive because the company would effectively be selling equity at a price below the value of its underlying assets.
Enterprise mNAV is calculated by dividing the company's enterprise value by its bitcoin reserves. Which is the market cap of all basic shares outstanding plus total debt plus total perpetual preferred stock - USD Reserve.
This does not mean the company cannot issue new shares. However, doing so at current valuation levels would likely invite further criticism, as Strategy's last few bitcoin purchases have all been dilutive to common stockholders, which has drawn backlash from the community.
The concern is that Strategy is increasingly being valued like a closed-end fund rather than an operating company. Similar vehicles, including the Grayscale Bitcoin Trust (in the years prior to its conversion to an ETF), have historically traded at substantial premiums to their underlying bitcoin holdings during periods of strong demand, only to later trade at persistent discounts as investor sentiment weakened. Closed-end funds often struggle to eliminate these discounts because they lack an effective redemption mechanism that allows arbitrage between the share price and the underlying assets' value.
Unlike a traditional closed-end trust, though, Strategy has several levers at its disposal, including issuing debt or equity when accretive, redeeming or refinancing securities, generating operating cash flows through its software business, and actively managing its capital structure.
Ripple CEO stays bullish on bitcoin but says Saylor's strategy has hurt crypto
Ripple CEO Brad Garlinghouse said he remains bullish on bitcoin but that Michael Saylor's approach to funding bitcoin purchases has damaged the broader crypto market, in a CNBC interview on Friday, as the preferred stock at the center of Strategy's model fell to a record low.
"Financial engineering does not drive long-term value," Garlinghouse said, arguing that the lasting value of any digital asset comes from its usefulness. "Team Michael Saylor wasn't focused on the right stuff and that has hurt the overall market."
He separated that from his view on the asset itself, saying he is still bullish on bitcoin.
Garlinghouse's target was the machine Strategy has used to accumulate bitcoin. For about a year, the company has issued preferred shares, a class of stock that pays a fixed dividend, to raise cash for more bitcoin.
Its STRC share carries an 11.5% annual dividend and is engineered to trade near $100. Garlinghouse pointed to STRC trading about 25% below that level as a "damning indictment" of the strategy.
The stock hit a record low on Thursday, falling as much as 26% below par, while Strategy's common stock dropped to its lowest since February 2024 and closed around $82 on Friday, all as bitcoin fell below $59,000.
The criticism lands on a week of mounting pressure on the model.
CryptoQuant said in a report that Strategy should pause its bitcoin buying and rebuild its cash reserves, noting the cushion behind STRC's dividends has thinned from more than seven years of coverage to about 14 months. When STRC trades below $100, Strategy's engine for issuing shares and buying bitcoin stalls, which is why the company has paused it.
Benchmark-StoneX analyst Mark Palmer argued that Strategy's funding engine has become "less efficient" rather than broken, and rejected comparisons between STRC and assets that have collapsed outright.
