Is MicroStrategy’s mNAV Premium Gone for Good?
MicroStrategy’s market premium over its Bitcoin holdings has narrowed to close parity, elevating questions on the way forward for Michael Saylor’s levered Bitcoin mannequin.
The newest disclosures present the corporate holding 649,870 BTC at a price of roughly $48.4 billion, but its fairness now not trades on the high multiples that powered earlier growth.
A Collapsing Premium and Rising Capital Pressures
The firm’s mNAV fell below 1x in November. mNAV, or market-to-net-asset worth, measures how a lot buyers are keen to pay above (or under) the worth of Strategy’s underlying Bitcoin.
It issues as a result of Strategy’s whole accumulation technique is determined by issuing fairness at a premium—permitting every new share offered to extend Bitcoin per share for current holders.
This sharp mNAV reversal follows a broader market downturn. Bitcoin fell greater than 30% from its October peak, dropping below $90,000.
Meanwhile, Strategy shares fell faster, reflecting issues in regards to the firm’s reliance on capital markets and rising most well-liked inventory prices.
Strategy’s capital construction has grow to be a central situation. The agency holds solely $54 million in money and owes greater than $640 million in annual most well-liked dividends.
The firm’s software program enterprise stays cash-flow destructive for 2025, widening the hole between obligations and inner liquidity.
As a consequence, Strategy has leaned on capital markets. It raised about $20 billion in the first nine months of 2025 throughout convertibles, most well-liked inventory, and at-the-market fairness.
That funding stored its Bitcoin accumulation going whereas servicing older devices with high and rising coupons.
However, the mechanics that when made this mannequin accretive have weakened. When Strategy traded at massive premiums to internet asset worth, issuing shares elevated Bitcoin per share for holders.
That impact disappears when the premium collapses. Issuing inventory close to NAV dangers dilution slightly than accretion.
Pressure elevated as the price of capital climbed. The firm’s STRC most well-liked shares raised their dividend from 9% in July to 10.5% in November to take care of par worth.
New most well-liked choices carry coupons above 10%, with penalty charges as much as 18% if unpaid. These phrases improve the annual burden and reinforce investor issues about sustainability.
Market Liquidity, MSCI Risks, and the Future of the Premium
Market confidence additional deteriorated after the October 10 crash. Bitcoin dropped about 17% as leveraged liquidations exceeded $19 billion. Order-book depth collapsed throughout exchanges, highlighting the fragility of liquidity throughout stress.
For a holder of greater than 3% of Bitcoin’s provide, this episode amplified fears about potential pressured promoting.
The index-inclusion risk compounds the issue. MSCI is consulting on excluding firms with greater than 50% of property in digital currencies from its indices.
Strategy sits close to 77% Bitcoin by asset share. JPMorgan estimates such an exclusion might set off round $2.8 billion in passive outflows, with as much as $8.8 billion attainable if different index suppliers observe.
If indices proceed with exclusion in February 2026, MicroStrategy’s mNAV could compress additional. Lower premiums cut back the viability of fairness issuance, which Strategy has used to handle its obligations and proceed accumulation.
A persistent low cost would complicate refinancing and weaken the corporate’s means to defend its capital construction.
Strategy maintains that its stability sheet provides long-term power. It not too long ago claimed “71 years” of dividend protection based mostly on the present market worth of its Bitcoin.
However, that calculation assumes frictionless gross sales, no worth affect, and no tax obligations. The October crash demonstrated how shortly liquidity can evaporate underneath stress.
Will MicroStrategy’s Bitcoin Premium Return?
The narrowing mNAV displays a market reassessment of leverage, liquidity, and danger. Investors seem much less keen to pay a premium for publicity they’ll now entry via spot Bitcoin ETFs with out company debt and most well-liked inventory layers.
The premium might return if Bitcoin rallies sharply or if index suppliers soften their stance. Yet the structural pressures stay.
Rising dividend obligations, destructive working money circulation, and a weakening fairness premium depart Strategy extra uncovered than earlier than.
Until these pressures ease, the market’s message is obvious. Investors are now not paying further for the Strategy mannequin, and the times of simple accretive issuance look like over.
Whether the premium returns now is determined by Bitcoin power, index decisions, and Strategy’s means to navigate its most tough interval but.
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