The ambitious Bitcoin acquisition strategy pursued by software firm MicroStrategy has encountered significant challenges this week. The company experienced two substantial setbacks that raise questions about its future approach to cryptocurrency investment and corporate financing.
Exclusion From S&P 500 Index Delivers Blow
In a surprising market development, MicroStrategy failed to secure inclusion in the prestigious S&P 500 index despite meeting all technical qualifications. Instead, trading platform Robinhood received the coveted position, celebrating its inclusion with a 7 percent stock price surge following the announcement.
This exclusion represents more than just a symbolic disappointment for MicroStrategy. The company missed out on substantial automatic purchases by passive index funds that would have amounted to billions of dollars in investment. Investors responded negatively to the news, pushing the stock down by 3 percent in after-hours trading on Monday.
Continued Bitcoin Accumulation Amid Challenges
Despite this setback, Chairman Michael Saylor remains committed to his company’s substantial Bitcoin position. On September 8, MicroStrategy revealed the purchase of an additional 1,955 Bitcoin at a cost of $217 million. The acquisition price of $111,196 per coin demonstrates the company’s continued pattern of buying near market peaks.
With this latest purchase, MicroStrategy’s total holdings now reach 638,460 Bitcoin valued at over $71 billion—the largest corporate Bitcoin treasury globally. The company’s average purchase price stands at $73,880 per Bitcoin, generating substantial paper profits with the cryptocurrency currently trading around $112,000.
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Investor Concerns Mount Over Strategy Shift
Recent performance metrics reveal growing investor skepticism. While Bitcoin itself has maintained relative strength, MicroStrategy shares have declined by 26 percent since July. The market capitalization-to-Bitcoin holdings ratio (mNAV) has contracted significantly to just 1.5 times the underlying cryptocurrency value.
More concerning to shareholders was the company’s recent policy reversal regarding equity issuance. In August, MicroStrategy abandoned its previous guideline against issuing new shares while the mNAV ratio remained below 2.5. This strategic U-turn creates potential dilution for existing shareholders and raises questions about the sustainability of the current Bitcoin accumulation approach.
Evaluating the Future Direction
MicroStrategy continues to serve as the primary Bitcoin proxy for traditional equity investors seeking cryptocurrency exposure. However, recent developments suggest the straightforward correlation between Bitcoin appreciation and MicroStrategy share performance has weakened considerably.
Market participants appear to be applying more rigorous scrutiny to the company’s capital allocation decisions rather than automatically rewarding additional Bitcoin purchases. The coming weeks will reveal whether MicroStrategy can maintain its premium valuation as a Bitcoin-focused equity or whether recent challenges signal a fundamental reassessment of its strategic direction.
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