Summary I believe MSTR is still a leveraged Bitcoin bet that trades about 18% above my simplified BTC-NAV/share. I upgraded to Hold on a more supportive outlook for BTC, considering the (likely) Fed rate cut this week and a more dovish stance in 2026. Strategy’s Q4 setup looks rough. The original $150k year-end BTC assumption was unrealistic, and management later shifted to an $85k–$110k range (midpoint 35% lower). I’m not buying the dip because dilution risk rises if capital markets tighten. Basic shares are up 20% YTD, and the company issued 8.214M shares on December 1. In my last coverage on Strategy ( MSTR ), I downgraded the stock to a Strong Sell on the view that a tougher macro backdrop would pressure Bitcoin and, by extension, MSTR. Take into consideration that my last coverage was back in March this year, when the fear of high tariffs occupied everyone's mind (therefore, the macro headwinds that I mentioned). Since my last coverage, the stock is down 40%, so I believe I was right with my thesis. Seeking Alpha In this article, I upgrade my rating to a hold, although I'm not considering adding any shares after the selloff in the last month. In my view, MSTR remains a leveraged bet on BTC, not a clean proxy. Furthermore, my model shows that MSTR still trades roughly 18% above BTC-NAV/share, leaving room for another leg down if the premium compresses. On the positive side, I see a dovish Fed, with a likely rate cut in December that will add liquidity to the crypto space. Overall, I feel bullish on Bitcoin heading into 2026, so I had to upgrade my strong sell on MSTR to a hold. A Rough Q4 On October 30, Strategy reported Q3 results and, most importantly, provided its outlook for Q4. Specifically, here is the guidance and a very important assumption: Strategy At the time of writing this article, Bitcoin is exchanging hands at $91.8k (39% below management's $150k expectations by year-end). To put into perspective how uphill the battle is for reaching that $150k target, take a look at the chart below. Trading View Even with a rate cut this Wednesday, and with a likely dovish Fed heading into 2026 (a topic I recently discussed in my latest macro article ), I see a very slim chance for Bitcoin to jump 62% in three weeks. Since the last earnings call, management has downgraded its expectations, and the latest update (December 1) assumes year-end BTC price between $85,000 – $110,000. Notice how this is a range rather than a point estimate. At the midpoint, we're talking about a 35% downgrade from the initial estimate. Here is the updated guidance : Strategy It's priced in! (some may say) Well, I disagree. I'll explain why in the next section. Why I'm Not Buying The Dip I see downside risk for another 18% drop in the share price. Let me explain why. The latest update shows 650,000 BTC held as of December 1. At the current BTC price ($91,754), that's a value of $59.64B. Now, if I exclude the debt ( $8.17B ) and the preferred liquidation prefs (STRF $1.332B, STRC $2.801B, STRK $1.361B, STRD $1.232B, adding up to a total of $6.73B), the BTC value left for common is approximately $44.74B. Strategy At the current share count (295.67M), I obtain a $151 BTC-NAV/share. In other words, at the current share price of $179, MSTR is about +18% above that simplified BTC-NAV/share. Furthermore, the downside risk if BTC prices decline further (unlikely scenario, but worth taking into account) is significantly more than just holding BTC. Let me explain. Let's assume the stock declined 18%, and now it trades closer to 1.0× that BTC-NAV. If Bitcoin then sells off by 23%, down to $70k (again, unlikely, in my view), the implied BTC-NAV/share (after accounting for debt and prefs) would be close to $103. From the $151 "fair value" that I obtained above, that drop represents a 32% decline in the share price. So the downward exposure is bigger than just holding BTC alone. Another reason why I wouldn't buy the dip is due to dilution. The BTC acquisition strategy largely depends on capital markets staying open. If the stock trades poorly, the company may still issue equity just to fund obligations. Specifically, this is how much: Strategy Please note that mNAV is not the same thing as NAV. Here is how management defines this metric: mNAV represents a multiple of Bitcoin NAV, calculated by dividing Enterprise Value (as defined below) by Bitcoin NAV (as defined below). Although Bitcoin NAV incorporates the label “NAV,” it is not equivalent to “net asset value” or “NAV” or any similar metric in the traditional financial context. Additionally, it is not a measure of the amount by which our enterprise value exceeds net asset value in the traditional financial sense of those terms. The fact that the company is willing to "tactically issue common equity below" the 2.5x mNAV threshold is not particularly encouraging from a dilution perspective. By looking at the latest earnings report, since the start of the year, the number of total basic shares outstanding has gone up by 20%. Strategy Looking at the chart above, the bulls may argue that BTC holdings rose faster in that same period (45% to be precise), but my point is that the funding machine depends on capital markets staying open. In the event Bitcoin continues its selloff, Strategy's stock could tank (as I've shown in my estimates above), which will negatively impact dilution (more shares would need to be sold to raise the same capital). The latest example of such an event (dilution) was on December 1, when the company issued 8.214M shares (Class A) to establish a US dollar reserve of $1.44 billion . Conclusion In my view, the stock has the potential to outperform BTC when either of these two events takes place: The premium to BTC-NAV expands (this could happen where there is euphoria in the crypto space). The company uses capital markets efficiently (meaning, dilution near ATHs) to increase its BTC per share. As I noted in this article, since the start of the year, the company's BTC reserves have increased by 45%, while basic shares only rose by 20%. Furthermore, the stock pays decent dividends (unlike BTC). Recently, Strategy has raised STRC’s dividend rate to 10.75%. Strategy Is that enough to make me want to buy MSTR over holding BTC? My answer is no, as I don't like the downside exposure if the BTC price turns south. Will this event happen? Well, given that the Fed is likely to cut in December, that should add liquidity into the markets, which will spill into riskier assets like crypto. Polymarket Looking ahead, the CME consensus is showing CME Group
