MicroStrategy shares at risk: here are the causes

Doubts begin to circulate about the sustainability of MicroStrategy’s debt. To tell the truth, since MicroStrategy started betting everything on Bitcoin a few years ago, every time there is a significant correction in the price of BTC, doubts about the sustainability of its debt increase. 

The debt of MicroStrategy

The fact is that MicroStrategy at a certain point started to go into debt to purchase Bitcoin. Furthermore, it has actually never stopped, given that the first purchase was made in August 2020, while the last one was made just a few days ago. 

Initially, the company was purchasing BTC using cash it had on hand, or by raising capital from various investors.

At a certain point, however, to be able to continue purchasing BTC, it began to issue debt, and in particular bonds. 

Currently, with a market capitalization of approximately 84 billion dollars, the company has accumulated a debt exceeding 4 billion dollars, while its 450,000 BTC have a total market value of just over 43 billion dollars. 

In light of these data, it is obvious that there is some concern. 

In particular, there are doubts about whether it will be able to repay the bonds, that is, the debt issued to purchase Bitcoin, given that the company has stated it does not want to sell BTC.

The performance on the Stock Exchange of MicroStrategy (MSTR)

During 2024, the price of MicroStrategy shares reached new all-time highs. 

Compared to 2020, when it still didn’t have Bitcoin in its treasury, the price first rose from $12 to over $130, and then during 2024 it first surpassed $180 and then also $540 in November. 

At that point, however, the market capitalization began to be much greater than the market value of the BTC in cash, and so there was a strong retracement. 

In the span of just four days, the price recorded a -38% from the highs, and subsequently continued to fall.

The minimum post-maximum price was reached on December 31st below $290, and since then it has managed to bounce back to at least above $340. 

However, during 2025 it has not shown clear signs of being able to restart, at least for now, even if a potential recovery of the bull run could allow the rebound to continue. 

In the case where the price of Bitcoin does not increase significantly in the coming months, it is possible that the retracement of MicroStrategy’s shares will continue, given that the ratio between market capitalization and portfolio assets is still decidedly high.

The risks for Michael Saylor’s society

Everything depends on the price of Bitcoin. 

The fact that the market capitalization of MicroStrategy is much higher than the value of the assets the company has in cash suggests that the price of its shares is already factoring in an increase in the price of BTC. 

Therefore, if this increase does not occur, or if it is significantly lower than expected, it is possible that the retracement of MicroStrategy’s stock price on the stock exchange may continue, and perhaps even fall back below $300 or beyond. 

Added to this are the doubts about the cash with which the company will repay its debt. 

In the current state of affairs, given that MicroStrategy has effectively declared that it does not want to sell Bitcoin, the only feasible hypothesis to repay the maturing debt would seem to be to issue more debt. 

Note that MicroStrategy issues zero-interest bonds, so in theory, it might not be particularly difficult to repay old debt with new debt. Additionally, the first large bonds maturing appear to be in 2027, so that risk would not be imminent. 

The correlation with the price of Bitcoin (BTC)

If then the price of BTC in the coming months were to take off, those that today seem like risks could instead turn into opportunities for those betting on MicroStrategy.

It should be remembered, however, that after the great bull runs there are usually heavy bear-markets, so even if the price of Bitcoin were to take off in 2025, in 2026 the situation for MicroStrategy could return to being critical. 

Already in 2022 the company went through a rough period, especially when the price of Bitcoin fell below its average purchase cost per BTC.

Currently, the average purchase cost slightly exceeds $60,000, so it is possible that even in the case of a bear-market, the price of Bitcoin will not fall below that threshold, if the bull run in 2025 continues. However, MicroStrategy is continuing to purchase BTC, thus raising its average purchase cost more and more. 

In other words, on MicroStrategy stocks, the risk seems to be even greater compared to a direct investment in Bitcoin.