Strategy Stock Is Under Pressure as Bitcoin Plunges. Watch This Number.

Strategy chairman Michael Saylor. (Joe Raedle/Getty Images)

Key Points

• Strategy stock edged up 0.6% to $178.13 on Friday, despite Bitcoin’s significant weekly decline.
• Strategy’s market multiple of net asset value was 1.22 times, indicating a premium to its Bitcoin holdings.
• Strategy owns nearly 650,000 Bitcoin at an average cost of $74,433 each. The coin’s price would need to drop 12% to reach that level.

Strategy stock was struggling for direction on Friday as investors tried to figure out how much longer the Bitcoin selloff will last.

Shares in Strategy, the world’s largest corporate Bitcoin holder, edged up 0.6% to $178.13 in early trading. The S&P 500 was 0.2% higher.

The stock had been down about 5% in premarket trading.

Bitcoin is on course for its worst week in more than three years, slumping as investors ditch riskier assets. That has piled pressure Strategy shares, which are widely seen as a proxy for the cryptocurrency because of the company’s vast Bitcoin holdings.

The number for investors to keep an eye on is Strategy’s market multiple of net asset value, or mNAV. It stood at 1.22 times as of Friday, indicating that Strategy is trading at a premium to the value of its Bitcoin holdings. Some bears see it as an inevitability that the stock will carry on sliding until Strategy’s mNAV is at or below 1.

Wall Street is also worried that a prolonged Bitcoin bear market could make it tougher for Strategy to pay off bonds in 2028, which is when holders can redeem the convertible debt.

As of Monday, Strategy owned just under 650,000 Bitcoin in total, bought at an average cost of $74,433 each. The coin’s price would have to drop another 12% to reach that level.

Write to George Glover at george.glover@dowjones.com