Strategy’s MSTR crashed to new 52-week low, trading below the value of the BTC treasury

Strategy’s common stock MSTR fell to a new 52-week low, again tracking the slump of BTC. MSTR crashed to $173.55, extending its slide from the past week. 

MSTR, Strategy’s common stock, remained under pressure, dropping to a low of around $173.55. Soon after that, MSTR had a small bounce to $176, though remaining close to its lowest range for the past year. The shares are down a net 40% in the year to date and over 62% for the past 12 months. 

MSTR invited additional fears of unraveling Strategy’s model. The common stock still has not completed its entire issuance plan, and Strategy expects to sell more MSTR to run its playbook until 2030. However, at this price range, selling MSTR to buy BTC may not be viable. 

As BTC dipped below $88,000 on Thursday, Strategy’s appeal is also waning. The company has bought BTC at an average price of $74,000, but most of its recent supply is underwater. 

Will Strategy issue more preferred shares? 

Until recently, Strategy filled the missing funding from a weak MSTR with new preferred share tranches. This allowed Strategy to still buy BTC, service its debt, and pay out dividends where appropriate. 

However, the expansion of obligations is also diminishing the ability of Strategy to buy more BTC based on its playbook. 

The new preferred shares for Strategy also remain riskier, offering high returns and a high chance of a crash. STRD has fallen to $66, STRK is down to $75, STRF is at $95.08, and STRC is at $92.02. Trading below $100 also means the shares may have higher effective returns, but also a higher risk. 

The preferred shares looked good when they traded close to their $100 face value, but they are currently also causing losses for holders. 

Strategy trades below the value of its BTC treasury

Strategy’s MSTR price slide led to a total valuation below the current price of the BTC treasury. 

Based on the ratio of fully diluted value to net asset value, Strategy has fallen to a ratio of 0.98. Despite the lack of MSTR dilution in the past few weeks and the higher number of BTC per share, the playbook has shown its negative side. 

On the positive side, Strategy still holds relatively valuable BTC. However, selling or compensating holders may actually depress BTC further, in addition to the panic and reputational damage. 

The current price slide has led to fears that MSTR can once again erase its value, similar to its crash during the dotcom boom. Strategy’s executive chairman Michael Saylor has still tried to calm the markets, stating the current playbook can hold a BTC drop of up to 80%.