MicroStrategy stock price continues to fall: a fatal mistake in management's decision-making
MicroStrategy (MSTR, now renamed Strategy Inc), a "Bitcoin treasury" company with Bitcoin as its main asset, experienced sharp fluctuations in its stock price in 2025.
MicroStrategy (MSTR, now renamed Strategy Inc), a "Bitcoin treasury" company with Bitcoin as its main asset, experienced sharp fluctuations in its stock price in 2025. Although it has risen by 45% year-to-date, the stock price has fallen frequently in the second half of the year. As of September 5, 2025, MSTR shares are trading at $327.59, down 0.81% from the previous trading day, and have fallen more than 40% from a 52-week high of $543. This continuous decline is not simply market noise, but the systematic mistakes of the company's management in strategic decision-making.
First, it is necessary to clarify the core driver of MSTR's stock price: the price of Bitcoin. Since 2020, MSTR has positioned itself as a "Bitcoin proxy stock", buying Bitcoin in large quantities by issuing debt and stock. As of mid-2025, the company holds more than 250,000 bitcoins, worth tens of billions of dollars. This strategy has driven stock prices to skyrocket during Bitcoin bull markets, such as when Bitcoin surpassed $120,000 in the first half of 2025, when MSTR stock price soared by 45%. However, when the price of Bitcoin fluctuates, MSTR's stock price tends to amplify this fluctuation. In August 2025, Bitcoin fell from its peak to $113,000, causing MSTR stock price to plummet by 7.8% in a single day. Earlier in April, Bitcoin slump also triggered a 10.6% drop in MSTR's stock price, highlighting the company's extreme exposure to a single asset.
This dependence is not a natural disaster, but a risk artificially created by management. Michael Saylor has consistently promoted that "Bitcoin is the ultimate asset" but ignored the inherent volatility of the crypto market. Analysts note that MSTR's stock price is highly coupled to Bitcoin, and any negative events - such as inflation data that exceeded expectations (such as the PPI report on the producer price index for August) - will be transmitted to the stock price through Bitcoin. What's more, the company's core business (AI-powered enterprise analytics software) contributed only a small percentage of total revenue, with revenue of $114.49 million in the second quarter of 2025, far below the valuation impact of Bitcoin assets. This makes MSTR more of a leveraged Bitcoin ETF than a tech company, causing investors to sell quickly when risk appetite declines.
The worst mistake of MSTR management was the financing strategy. The company constantly buys Bitcoin by issuing convertible bonds and stocks, but this is essentially a "permanent dilution machine." For example, in July 2025, MSTR spent 4,225 Bitcoins on the acquisition of 4,225 Bitcoins, but the funds came from debt and equity offerings, resulting in continued dilution of shareholders' equity. As of now, the company is heavily burdened with debt and lacks cash reserves, and if Bitcoin falls further, it may be forced to issue more debt or equity at higher interest rates, further pushing down the stock price.
The fatal point of this strategy lies in the collapse of the valuation premium. MSTR stock price has been above its net asset value (NAV) for a long time, but in 2025 investors began to question the sustainability of this premium. Analysts compare MSTR to a "Ponzi scheme" because it relies on the constant issuance of new shares to support Bitcoin purchases rather than organic growth. In August, a key analyst report reiterated a "sell" rating, citing the risk of falling Bitcoin prices and dilution as major drags. In addition, the company's new equity issuance policy limited the ability to issue further shares, which was intended to protect shareholders but exacerbated liquidity concerns, causing the stock price to plummet by 9% on August 1.
Saylor's management style exacerbates this problem. He transformed the company into a Bitcoin holder while neglecting diversification. In contrast, other companies such as Tesla hold Bitcoin but do not use it as a core strategy. MSTR's enforcement risks—including legal challenges and market skepticism—are further amplified. Investors such as Jim Cramer have publicly advised to stay away from the MSTR, calling it "high-risk speculation."
Another key mistake is management's neglect of the core software business. MSTR was originally an enterprise intelligence software provider, but Bitcoin strategy has dominated everything. Q2 EPS was $32.60, which exceeded expectations, but this was mainly due to Bitcoin valuation adjustments, not software revenue growth. Management has not invested in AI or cloud service innovation, leading to weak growth in the software sector. In the 2025 tech bull market, MSTR failed to benefit and instead fell behind due to Bitcoin's drag.
In addition, management's disregard for market signals is worrying. Despite analyst warnings about over-leverage and execution risks, Saylor insisted on "buying and holding" Bitcoin. This has led to a bearish shift in investor sentiment, with extreme sentiment indicators showing a 50% downside risk for MSTR. The company also faces regulatory pressures, such as potential changes in equity guidelines, further limiting its financing flexibility.
The continued decline in MSTR's stock price is not irreversible, but requires deep reflection from management. In the short term, if Bitcoin rebounds to higher levels, the stock price may recover; But in the long run, the model of over-reliance on a single asset is unsustainable. Forecasts suggest that the average stock price in 2025 could range from $344.69 to $632.60, but the downside risks are significant. It is recommended that management diversify assets, strengthen investment in core businesses, and reduce leveraged buyouts to rebuild investor confidence.