Home / Business and Economy / Strategy's Value Dives Below Bitcoin Holdings
Strategy's Value Dives Below Bitcoin Holdings
27 Nov
Summary
- Company's stock now trades at 0.879 on the market-to-net-asset value metric.
- This is the first time the company's stock has traded below 1.0 mNAV.
- Analysts attribute the drop to cyclical factors, not business model issues.
Strategy's valuation has significantly shifted, with its market-to-net-asset value (mNAV) recently dropping to 0.879. This metric, indicating what investors pay for each dollar of the company's Bitcoin holdings, has fallen below 1.0 for the first time since August 2020. The stock previously traded at a substantial premium, acting as a leveraged bet on Bitcoin's price.
This recent compression is attributed by analysts to decreased expectations for Bitcoin's performance. They highlight a strong correlation between Strategy's mNAV and Bitcoin futures curves, suggesting that as bullish sentiment wanes in the futures market, the company's premium also compresses. This cyclical pattern is not viewed as a fundamental flaw in Strategy's business model.
The unsustainable premiums seen in digital asset treasury companies during the summer have now unwound. While Strategy maintained its premium longer than many competitors, it ultimately succumbed to the broader market compression. Experts anticipate that Strategy's mNAV should rebound as Bitcoin's price increases.
