MicroStrategy’s Core Strategy Faces Scrutiny as Share Dilution Intensifies

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While MicroStrategy continues its aggressive accumulation of Bitcoin, the market's reaction to its latest purchase reveals deepening concerns about the sustainability of its flagship corporate strategy. The business intelligence firm now holds 712,647 BTC, valued at approximately $63 billion, yet its equity trades near historic lows, signaling investor skepticism about its operational model.

The company announced on January 26 that it had acquired 2,932 Bitcoin for $264 million. This purchase was funded not through operating cash flow, but through the sale of 1.57 million common shares and 70,201 preferred shares. This financing method has exposed a critical flaw: the growth in Bitcoin per share is stagnating.

A closer examination of the period between January 5 and January 26 shows the diluted share count expanded by 5.36%, while the Bitcoin treasury increased by only 5.77%. The narrowing gap is alarming. From mid to late January, the Bitcoin coverage per share inched up a mere 0.38%, indicating the model's momentum has nearly halted.

Key Treasury Metrics:

• Total Bitcoin Holdings: 712,647 BTC
• Average Purchase Price: $76,037 per Bitcoin
• Unrealized Gains: $8.3 billion
• Remaining Share Issuance Capacity: $8.17 billion

Trading at a Discount to Underlying Value

A more severe development is the stock's current valuation. The ratio of market capitalization to net asset value (mNAV) has fallen to 0.94x. This means shares are trading at a 6% discount to the value of the company's Bitcoin holdings alone. In this environment, each new share issuance potentially destroys shareholder value rather than creating it.

This inversion strikes at the heart of MicroStrategy's growth engine. For years, the strategy relied on the stock trading at a premium to its Bitcoin assets. This premium allowed the company to issue new shares at an advantageous valuation, using the proceeds to buy more Bitcoin and thereby increase the BTC per share ratio. This fundamental arithmetic fails when the stock trades at a discount.

Technical Support Under Pressure

From its July peak of $473, the share price has declined over 60%. It has been oscillating between $160 and $180 for weeks, with market analysts noting a potential triple-bottom formation around the $160 level. A sustained break below this technical support could trigger a new wave of selling pressure.

MSCI Decision Provides Temporary Relief

Some pressure was alleviated in early January when index provider MSCI announced it would postpone a decision that threatened to exclude Bitcoin-heavy companies from its global equity indices. MSCI had previously considered reclassifying firms with over 50% of their assets in digital currencies as "fund-like," making them ineligible for inclusion. This reprieve, however, is temporary.

Fourth-Quarter Earnings Loom

All eyes are on MicroStrategy's upcoming fourth-quarter 2025 results, scheduled for release on February 5. While investment bank Mizuho has reaffirmed its "Outperform" rating on the stock, it simultaneously reduced its price target from $484 to $403. Investor focus will likely center on institutional demand trends and the development progress of the company's Mosaic platform.

With Bitcoin trading around $89,000 and precious metals like gold breaking above $5,200 and silver reaching an all-time high of $117.69, MicroStrategy confronts the urgent challenge of adapting its financing strategy before the cycle of share dilution and value erosion becomes irreversible.