What’s Strategy (MSTR) Really Worth? Determining Fair Value
Strategy has become the poster child for corporate Bitcoin adoption. But how do you determine what it's worth?
Back in November 24, after a massive post-election run-up, MSTR was the darling of the Bitcoin scene, with insane short-term returns.
But after heavy ATM (at the market) selling and struggling to make new highs, many investors wonder whether they should rotate out of MSTR and chase a faster horse.
This article examines how we determine Strategy’s value based on its long-term premium.
Fair value = bitcoin per share x bitcoin price x premium
As you’ll see, Strategy is currently sitting well below its fair value based on its massive bitcoin stack.
With the front running of possible S&P inclusion imminent and a transition to convertible bonds and less ATM once volatility increases, MSTR has plenty of upside potential for those willing to hold on a little longer.
Key Points
· Strategy holds 576,2303 BTC—more than any public company.
· BTC per share continues rising due to accretive fundraising.
· Fair value based on BTC and mNAV premium = $497 vs. the current price of $409.
The Power of Premium
The price premium people are willing to pay is the key differentiator between the leaders and the also-rans in the leveraged bitcoin equity space.
Strategy was the OG bitcoin treasury company, which leveraged equity, paving the way for others like MetaPlanet, Semler, and The Blockchain Group, who have implemented their playbook.
With 4.3M followers on X, Saylor has developed an almost cult following, especially from those who have profited handsomely.
But how do we value that premium?
Price Tells the Story
Price is what everyone sees, and the trend is your friend.
Strategy’s long-term returns have been stellar, up more than three thousand per cent since they started buying bitcoin in August 2020, more than anything else on the US stock market. With rapid growth, many investors have jumped on the trend.
Strategy has also done exceptionally well during the recent stock market correction.
Relentless BTC Stacking
Chasing BTC Yield as their #1 KPI, Strategy has stacked BTC relentlessly, using the ATM, convertible bonds, and preferred stocks to raise capital. They now hold 576,2303 BTC. This is likely an uncatchable position, though there’s some competition from MetaPlanet, 21 Capital, and the Blockchain Group.
Their preferred stocks, STRK and STRF, are well-positioned to be attractive options for the bond market, especially given the recent downgrade of US government bond ratings. Saylor has said he’d love to see them take in 1% of the $318T bond market, which would give them 1.2T to fund more BTC purchasing in the coming years!
With a debt ratio of 17% (well below their upper limit of 30%), they have plenty of dry powder to deploy more convertible bonds to buy BTC once volatility picks up. If BTC rips later this year, they could end up with more than 900k BTC by the end of 2025!
While they have relied heavily on the ATM recently, the dilution has still been accretive, stacking more sats per share.
BTC Value Keeps Climbing
This accumulation doesn’t just grow their headline BTC total—it also steadily increases the BTC value per share.
BTC Value per share is the BTC per share multiplied by the BTC price. While the price of BTC fluctuates, Strategy’s BTC value per share (along with its market cap) has continued to increase to new all-time highs.
Why mNAV Matters
While many newer leveraged bitcoin equities talk big with no track record and create pump-and-dumps, Strategy has a demonstrated track record that makes investors willing to pay a premium because they believe they can continue accumulating more BTC.
Strategy’s mNAV has been trending up on a slow exponential over the past three years. Even though it’s currently hovering just above 2, it’s still well above the long-term trend.
How We Calculate Fair Value
To visualise how Strategy’s fundamentals connect with its price action, we chart BTC value per share against price on a log-log scale. The long-term trend premium is baked into this gradient.
Buy Zones: Understanding Fair Value Ranges
We can then use this relationship to calculate Strategy’s current fair value, which is $497, which is significantly higher than its current price of $409.
As we can see on the chart below, the fair value (green line) runs through the middle of the price to date, with the actual price oscillating above and below this value based on fear and greed, driven by market news.
At the bottom of the chart, we’ve shown the fair value percentage oscillator, which currently sits at 21%. This is much lower than Bitcoin (36%), MetaPlanet (46%), Semler (98%) and The Blockchain Group (100%).
To the right of the chart, we’ve shown where Strategy’s price could be at the end of the year based on its current BTC Yield and the relationship between BTC value per share and price.
While other leveraged bitcoin equities are giving Strategy a run for its money, an increase from $409 to the end-of-year fair value price of $911 represents a CAGR of 204% p.a., which is nothing to be sneezed at. Meanwhile, front-running of S&P inclusion could drive Strategy’s price even higher.
Fair Value Ranges
People who have been holding for a while or bought at the November peak are wondering when the price will go higher, and others want to know when it might be a good time to buy. So, to provide more clarity, we’ve also shown the fair value ranges at the 5th, 20th, 85th, and 95th percentiles.
The 5th and 95th are extremes, where the price will only go above or below 5% of the time. Savvy investors could buy (or hold) when the percentile rank is low and take some profits to rotate to other opportunities only when the percentile rank is approaching the top of the range. Conversely, selling or shorting MSTR when it’s well below its fair value might not be such a good idea.
Final Take & Next Steps
Strategy (MSTR) continues to lead the pack in Bitcoin treasury innovation, with a commanding BTC stack, accretive fundraising strategies, and a proven ability to execute on its Bitcoin accumulation strategy.
Despite short-term volatility and dilution concerns, the underlying fundamentals in terms of bitcoin value per share remain strong.
With 576,2303 BTC on the books, a disciplined use of leverage, and a premium that reflects investor confidence, Strategy's current price sits well below its calculated fair value of $911.
As the market digests potential S&P 500 inclusion and Strategy shifts from raising funds via the ATM to convertible bond financing and preferred stocks, upside potential remains.
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