Odaily Planet Daily reports: Although Bitcoin's recent decline has pressured MicroStrategy (MSTR)’s stock price, the company’s current market capitalization still trades at approximately a 31% premium over its underlying net asset value. Analysts believe this premium stems from past market confidence in Michael Saylor’s “Bitcoin Appreciation Flywheel” model; however, as this model loses effectiveness, the premium faces further downward pressure.
According to estimates, Strategy currently holds approximately 844,000 bitcoins, valued at about $51.1 billion based on a price of $60,500 per bitcoin. Including its software business and cash assets, total assets amount to approximately $53.6 billion. After deducting liabilities such as approximately $6.7 billion in convertible bonds and $15.5 billion in preferred stock, the net asset value attributable to common shareholders is approximately $31.8 billion. However, as of June 5, the company’s market capitalization remained at $41.6 billion, exceeding its net asset value by approximately $10 billion.
Since 2025, Saylor has significantly financed Bitcoin purchases through the issuance of preferred shares, increasing the company’s total debt and preferred share obligations from approximately $6.9 billion to $21.8 billion. Of this, preferred shares have reached $15.5 billion, requiring annual dividend payments of about $1.5 billion, while the company’s cash reserves stand at only around $1 billion—insufficient to sustainably cover these expenses.
In addition, the number of outstanding shares of Strategy has increased from 980 million before the Bitcoin purchase to 3.53 billion, a 250% increase. If the price of Bitcoin drops to $50,000, its net asset value could fall to approximately $23 billion. In the event that the premium disappears, the theoretical decline in MSTR’s stock price could far exceed the decline in Bitcoin’s price.
Analysis suggests that to cover its growing preferred dividend payments, Strategy may need to continuously issue more preferred shares or sell part of its Bitcoin holdings, potentially creating a negative cycle of "issuing preferred shares—paying dividends—further fundraising," known as a "death spiral." (Fortune)