Shares of Michael Saylor’s Bitcoin treasury firm, MicroStrategy, saw a 1.22% increase in early trading today, offering the company temporary respite. The stock has fallen 66% from its peak last July, and this morning its “mNAV”—a technical indicator measuring whether the firm is valued above or below its Bitcoin holdings—stood at 1.02.
Should this gauge drop below 1, it technically signifies the company is worth less than the Bitcoin it possesses. At that juncture, the stock would likely face selling pressure from numerous investors, as there is little rationale for holding a stock whose value is derived from Bitcoin if it trades at a discount to the cryptocurrency itself.
The stock has recently remained above this critical zone.
The company’s market capitalization is already lower than the value of its Bitcoin. Today, its market cap was $47 billion, while the Bitcoin on its balance sheet is valued at just under $60 billion. This situation alone is precarious. However, if the company’s mNAV (“market-to-net asset value”) declines below 1, the stock could enter a significantly more challenging phase. mNAV is calculated by taking the company’s total market cap, adding its debt, subtracting its cash, and then dividing by the total value of its Bitcoin reserves. A value below 1 makes the investment thesis for owning MicroStrategy stock considerably more difficult to justify.
reached out to the company for a statement.
As is his custom, Saylor has been posting optimistic tweets about MSTR stock, including data indicating that “open interest” (outstanding investor positions) is the equivalent of . This suggests the stock is heavily traded (though a substantial portion of these positions are likely short bets against the company). He also shared an AI-generated image of himself .
Beyond the mNAV threshold of 1 exists another perilous level for MicroStrategy: the average purchase price at which the company has historically acquired Bitcoin. Over the years, . Bitcoin currently trades at $89.6K. A drop below $74K would mean the value of MicroStrategy’s Bitcoin holdings is less than the total amount Saylor paid for them.
Proponents of MicroStrategy might contend that such a scenario could present a buying opportunity—if the stock is valued below its Bitcoin, the share price could potentially rise to align with the cryptocurrency’s value; it might increase further if Bitcoin resumes its upward trajectory.
However, this would again pose a difficult challenge for traders who are not staunch believers. Why would one hold a stock that is worth less than the fundamental asset it holds?