Key Insights
- The MSTR stock price has formed a bearish flag pattern, pointing to more downside.
- The company has continued to dilute its shareholders in the past few months.
- The short interest has continued rising, reaching a high of 11.5%.
The MSTR stock price continued its downtrend this week, moving to a low of $160 on Wednesday. It has dropped by over 65% from its 2025 high, and technicals and key fundamentals suggest further downside, potentially to the key support at $100 in the coming months.
MSTR Stock Technical Analysis Points to More Downside
Technical analysis suggests that the MSTR stock price will point to more downside in the near term. It has remained below all moving averages, a sign that bears remain in control.
The stock has also remained below the Supertrend indicator. In most cases, an asset continues to fall as long as it remains below the Supertrend indicator.
Strategy stock has formed a bearish flag pattern, consisting of a vertical line and a horizontal channel. It has moved close to the lower side of this channel.
Therefore, the most likely scenario is a bearish breakout, potentially to the next psychological level at $113.67, its lowest level in September 2024. This target is about 30% below the current level.
On the other hand, a move above the psychological level at $200 will invalidate the bearish outlook and point to more upside.
Strategy at Risk as Dilution Continues
MSTR’s stock price could continue to fall as the company continues to dilute shareholders through share sales.
Data compiled by TradingView shows that the outstanding shares have jumped to 267 million from less than 80 million in 2021.
The dilution has continued, raising cash to buy Bitcoin. It raised over $2.13 billion last week and accumulated 22,305 coins, bringing its total holdings to 709,715.
Most of these funds came from selling common shares worth over $1.8 billion and STRC shares worth $293 million. It also sold SRRK shares worth over $3.4 million.
As the chart below shows, the company has more dilution to go, as it has over $8.42 billion in MSTR stock and $20.3 billion in STRK stock.
Historically, investors were comfortable with being diluted because the company was trading at a premium to its net assets value (NAV).
Recently, however, the NAV multiple has dropped sharply, and the premium has disappeared.
Data compiled by Bitcoin Treasuries shows that the mNAV, based on market capitalization, has dropped to 0.731. The mNAV based on enterprise value has also dropped to 0.96.
At the same time, historical data shows that the company’s Bitcoin accumulation strategy has not had strong financial results. It has accumulated 709,715 coins since 2020 at the average cost of $75,974. This means its profit stands at just 16%, indicating it has underperformed the broader market.
More Investors are Shorting Strategy Stock price
Another bearish catalyst for MSTR stock is that more investors have continued shorting the company this year.
Data compiled by Seeking Alpha shows that the company’s short interest has continued rising this year. It jumped to 11.50% from last year’s low of 6%.
Stocks often drop further when the short interest is rising as this means that investors are taking the opposite direction.
Summary
The MSTR stock price has come under pressure in the past few years, mirroring the performance of other Digital Asset Treasury (DAT) companies, including popular names like BitMine and American Bitcoin.
Technical analysis suggests the stock has more downside in the coming weeks, as it has formed a bearish flag and remains below all moving averages.
Fundamentals suggest the stock faces more challenges, including ongoing dilution and rising short interest, which has jumped to 11.5%. It has also lost its premium, with its market NAV falling below 1.
The post Here’s Why the MSTR Stock is at Risk of a Big Dive appeared first on The Market Periodical.