MicroStrategy Incorporated ($MSTR), the business intelligence firm turned Bitcoin powerhouse under the leadership of Michael Saylor, is grappling with a dramatic 55% decline in its stock price from its November 2024 all-time high, sparking heated debate among investors and analysts. As of February 25, the company’s shares fell below $250, trading at their lowest level since early November, according to The Kobeissi Letter, which highlighted the plunge in a detailed thread on X.
The precipitous drop, detailed in a chart shared by The Kobeissi Letter, underscores growing concerns about MicroStrategy’s aggressive Bitcoin investment strategy. The company currently holds approximately 499,096 Bitcoin, valued at $43.7 billion, with an average purchase price of $66,350 per coin. However, with Bitcoin’s value dipping to around $87,000—down from its peak—investors are questioning whether MicroStrategy could face forced liquidation of its cryptocurrency holdings, a scenario that could jeopardize its financial stability.
“Many are asking about ‘forced liquidation’ as $MSTR falls over 55%,” The Kobeissi Letter stated in its initial post, kicking off a thread that explored the mechanics of MicroStrategy’s debt structure and its reliance on Bitcoin. The company’s strategy hinges on borrowing funds—primarily through 0% convertible notes—and using the proceeds to acquire more Bitcoin, driving its stock price higher in tandem with cryptocurrency gains. However, the current bear market for MicroStrategy’s stock, coupled with Bitcoin’s volatility, has raised doubts about the sustainability of this approach.
Analysts point to MicroStrategy’s $8.2 billion in debt, representing a leverage ratio of about 19%, as a potential vulnerability. While most of this debt is structured in convertible notes that don’t mature until 2028, and much of it has conversion prices below the current share price, a significant and prolonged drop in Bitcoin’s value—potentially exceeding 50%—could strain the company’s ability to refinance or raise new capital. “If Bitcoin falls well below their average entry price, what happens to $MSTR?” The Kobeissi Letter asked, reflecting a common investor concern.
Michael Saylor, MicroStrategy’s executive chairman and vocal Bitcoin advocate, has dismissed liquidation fears, famously stating in a recent interview that even if Bitcoin’s price dropped to $1, the company would not liquidate but instead “buy all of the Bitcoin.” With Saylor holding 46.8% of the voting power, any shareholder vote on liquidation or dissolution—a prerequisite for forced selling under the company’s debt agreements—appears highly unlikely without his approval.
Still, the situation has divided opinions in the investment community. Some, like @matt_utxo on X, argue that MicroStrategy’s current dip represents a buying opportunity, noting that the stock’s price-to-net-asset-value (NAV) ratio has reset to a more sustainable 1.57x from a peak of 3.4x, suggesting the “MSTR trade” remains viable as Bitcoin recovers. Others, including short-sellers, see the decline as evidence of overvaluation and deeper troubles, with the stock’s correlation to Bitcoin exposing it to excessive risk.
The broader market context adds urgency to the debate. Bitcoin’s recent volatility, coupled with rising interest rates and tighter credit conditions, could make it harder for MicroStrategy to issue new debt or attract investors willing to fund its Bitcoin-buying spree. “Would investors still fund this in a bear market?” The Kobeissi Letter pondered, noting that MicroStrategy’s business model relies on continuous capital raises to fuel its cryptocurrency purchases.
As of February 26, 2025, MicroStrategy’s stock continues to hover near its recent lows, with Bitcoin trading at approximately $87,000. The company’s fate remains closely tied to the cryptocurrency’s trajectory, leaving investors split between those betting on a rebound and those bracing for further declines. For now, Michael Saylor’s bold vision of MicroStrategy as a Bitcoin-centric investment bank hangs in the balance, with the market watching closely for its next move.
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