MicroStrategy's Bitcoin bet backfires as stock discount deepens to 40%
MicroStrategy's stock has taken a hit as Bitcoin's price falls. Since mid-2025, the company's market value has dropped to just 60-70% of its net asset value (NAV), widening the usual discount. This shift complicates fundraising but doesn't halt the firm's Bitcoin buying spree entirely.
The current slump mirrors past trends. During the 2022 bear market, the discount on MicroStrategy's stock peaked at over 50% below NAV. In contrast, late 2024 saw a brief premium of 30% when Bitcoin prices soared. When shares trade at a discount, selling them to buy more Bitcoin becomes less appealing, as it dilutes existing shareholders more heavily.
In 2022, under similar conditions, the company added only around 10,000 Bitcoin over the entire year. Today, the challenge remains: a lower stock price makes large capital raises less attractive. Yet, the firm still finds ways to keep purchasing.
Debt obligations aren't an immediate threat. MicroStrategy holds roughly $8.3 billion in convertible notes, but the first major repayments aren't due until late 2027. The company can extend maturities or convert debt into equity, avoiding forced Bitcoin sales for now.
The widening gap between MicroStrategy's stock price and its Bitcoin holdings limits aggressive buying. However, the firm retains flexibility with its debt structure and can still acquire Bitcoin, albeit at a slower pace. The next key test arrives in late 2027 when the first large convertible notes come due.
