The Decline of Investor Faith in Michael Saylor’s Strategy (MSTR)
Michael Saylor, the CEO of Strategy (MSTR), has been one of the most prominent advocates for Bitcoin (BTC) in the corporate world. Over the past few years, he has made headlines with his aggressive BTC purchasing strategy, which has been complemented by a series of high-profile events, including a televised investor gala, a meet-and-greet with the First Family, a corporate name change, and a new listing on the Nasdaq stock exchange. Despite these efforts, however, the investor enthusiasm for Saylor’s strategy has been waning. The premium that investors are willing to pay for MSTR’s BTC holdings, known as the “multiple-to-Net Asset Value” (mNAV), has been declining steadily for months.
The Shrinking Premium: Understanding the mNAV Decline
The mNAV is a key metric that reflects the market’s confidence in Saylor’s ability to grow the company’s BTC holdings on a per-share, dilution-adjusted basis. It is calculated as the ratio of the company’s market capitalization to the value of its BTC holdings. As recently as November 2024, this multiple stood at an impressive 3.4X, with some analysts even suggesting it could reach as high as 10X. However, fast forward to today, and this figure has dropped significantly, falling below 1.7X. This decline represents a loss of investor faith in Saylor’s strategy, despite the company’s BTC holdings being valued at $45.2 billion and its market cap standing at a still generosity $76.5 billion.
Saylor’s Efforts to Revive Investor Sentiment
In an attempt to reverse this trend, Saylor has continued to double down on his BTC buying spree. Just this morning, he announced an additional $2 billion worth of BTC purchases, bringing the total BTC accrued per diluted MSTR share to 6.9% year-to-date. This translates to an annualized yield of over 56%, which on the surface seems like a strong performance. However, despite this seemingly positive news, the price of MSTR stock has failed to respond positively. At the time of writing, MSTR is trading 1% lower than the previous day, a clear indication that investors are not buying into Saylor’s narrative.
The Lowest mNAV Since May 2024
The decline in mNAV has reached a critical point, with the metric now sitting at its lowest level since May 13, 2024. This is a worrying sign for Saylor and his team, as it suggests that the market is losing confidence in their ability to effectively manage and grow the company’s BTC holdings. The implications of this decline are evident in the share price of MSTR, which is currently trading at its lowest level since November 11. This downward trend is a far cry from the optimism that surrounded MSTR just a few months ago, when the stock was riding high on Saylor’s ambitious BTC buying strategy.
The Dilution Problem: A Growing Concern for Investors
One of the key factors contributing to the decline in mNAV is the issue of dilution. As Saylor continues to issue new shares to finance his BTC purchases, existing shareholders are seeing their stakes diluted. Year-to-date, the company has accrued 6.9% more BTC per diluted share, which may seem like a positive development. However, this has come at the cost of increasing the number of shares outstanding, which has had a negative impact on the stock price. This delicate balance between BTC accretion and share dilution is a challenge that Saylor and his team are struggling to navigate effectively.
The Investor Takeaway: A Loss of Confidence in Saylor’s Strategy
The decline in mNAV and the corresponding drop in MSTR’s stock price are clear indicators of a broader loss of confidence in Saylor’s strategy. Despite his best efforts to revive investor sentiment, including high-profile events and aggressive BTC purchasing, the market is no longer buying into the narrative. The shrinking premium reflects a growing skepticism among investors about Saylor’s ability to deliver on his promises, particularly in light of the dilution caused by his share issuance strategy. As the mNAV continues to decline, Saylor faces an increasingly uphill battle to regain the trust of the investment community and restore the luster to his once-high-flying stock.
