Strategy Stock Falls to Lowest Level Since April on Bitcoin Drop, Eroding Premium

Strategy owns some 640,000 Bitcoin now worth around $70 billion.  (Dreamstime)

Strategy stock fell 7% Thursday and hit its lowest level since April due to a decline in Bitcoin and a continued erosion of the premium the stock commands relative to the value of the company’s Bitcoin holdings.

Strategy shares were down $22.61 to $300.70 as Bitcoin declined about 4% to $109,200 Thursday.

Strategy tends to underperform Bitcoin during selloffs of the cryptocurrency since it offers a leveraged play on Bitcoin. The company has used debt and preferred stock as well as equity sales to amass the largest corporate Bitcoin holding of some 640,000 coins now worth around $70 billion.

But Strategy stock has dramatically underperformed Bitcoin over the past two months. That has reflected an eroding premium of the stock versus Bitcoin.

The company puts its multiple of enterprise value (stock market value plus net debt and preferred stock) stock at 1.44 on Thursday close, according to the company website. That ratio was closer to two in mid July when the stock traded as high as $460.

Strategy’s surprise July 31 decision to curb equity sales to purchase Bitcoin unless the stock price is around $600 appears to be a driver of the stock’s decline and contracting premium to NAV.

Specifically, the company then said it would issue equity only to fund bond interest and preferred stock dividends on some $14 billion of debt and preferred stock, unless the price to NAV was 2.5 or higher—corresponding to a stock price around $600. Chairman Michael Saylor characterized that move as one designed to avoid diluting common shareholders.

Strategy has softened that position since then after an adverse market reaction, saying in August it would issue equity to buy Bitcoin if market conditions were advantageous.

Even with the relaxation of that rule, there have been sharply reduced sales of equity since then, and slower accumulation of Bitcoin relative to the first half of the year.

This matters because equity sales to fund Bitcoin purchases are advantageous to existing holders when the price/NAV is above one. In those situations, the company boosts its Bitcoin holdings faster than it lifts its share count, which the company calls its Bitcoin Yield. The company issued about $11 billion to buy Bitcoin in the first half of 2025.

With slower Bitcoin purchases and less value accretion to the company, investors appear to be willing to pay a smaller premium for the stock relative to the company’s Bitcoin investments. The stock is now at the same level as mid April when Bitcoin traded under $90,000.

There also was an insider sale disclosed recently. On Sept. 18, Shao Wei-Ming, Strategy’s executive vice president and general counsel, made a series of transactions culminating in the sale of $3.6 million worth of company stock.

Write to Andrew Bary at andrew.bary@barrons.com