Strategy Shares Plunge as Forecasts Dim and Technical Alarms Sound

Strategy US5949724083

Strategy Inc. finds itself navigating a severe downturn, with its stock accelerating losses following a stark revision to its annual outlook. The company's Friday trading session saw significant pressure, compounded by ominous technical indicators and a sudden, concerning valuation discrepancy tied to its Bitcoin holdings.

In a notable market development, Strategy's enterprise valuation has dipped below the assessed value of its Bitcoin treasury for the first time. With an enterprise value of approximately $59 billion, the firm's Bitcoin reserves are currently valued at around $59.7 billion. This negative ratio presents a clear warning sign to the investment community.

Concurrently, the company has paused its aggressive Bitcoin acquisition program. Management has instead bolstered its cash position, raising reserves from $1.44 billion to $2.19 billion. These funds are earmarked for debt servicing and potential future dividend payments.

Earnings Guidance Shock Sends Shares Lower

The primary catalyst for the recent sell-off was a drastic reduction in the company's financial forecast. For fiscal year 2025, Strategy's management now projects earnings per share in a range between a loss of $17 and a profit of $19. This guidance falls far short of the nearly $32 per share that market analysts had been anticipating.

The investor reaction was immediate and negative. Shares declined by roughly 2.65 percent on Friday, closing near $157. Since the start of the year, the equity has shed more than 40 percent of its value.

Technical Chart Pattern Flashes a Classic Sell Signal

Further darkening the technical picture, Friday's trading activity triggered a formation known as a "Death Cross" on Strategy's chart. This pattern occurs when the 50-day moving average crosses below the 200-day moving average, widely interpreted by chartists as a bearish signal. The stock is now trading below both of these key trend lines and is hovering perilously close to its 52-week low of $154.12.

Additional downward pressure could emerge from passive investment funds. Should Strategy be removed from the MSCI index, forced selling amounting to as much as $8.8 billion could ensue.

Bitcoin Market Correction Adds to the Burden

The company's fortunes remain tightly coupled to the cryptocurrency market. Bitcoin itself has corrected sharply, falling approximately 30 percent from its early October all-time high above $126,000 to a current level near $87,700. Market sentiment, as measured by the Crypto Fear & Greed Index, has been stuck in "Extreme Fear" territory since mid-December.

CEO Phong Le attempted to project calm during Friday's announcements. He stated that Bitcoin's fundamental data is "better than ever," citing supportive tailwinds from the U.S. government and banking system. While acknowledging a current disconnect between price and fundamentals, he expressed optimism for the company's prospects in 2026.

A Critical Support Level Looms

All eyes are now on the $154 price level as a crucial test of support. A sustained break below this point would likely intensify technical selling pressure. The coming weeks will reveal whether Strategy resumes its Bitcoin purchases or continues to prioritize liquidity preservation. Despite 88.9 percent of covering analysts maintaining "Buy" recommendations, market uncertainty is mounting as the gap between their price targets and the current share price continues to widen.