Strategy Inc. (NASDAQ:MSTR), often seen as the largest Bitcoin treasury company, experienced a nearly 2x stock surge over the last twelve months, driven by the significant rally in Bitcoin. However, the stock is currently trending lower, mirroring a significant downturn in global markets today. The Hang Seng index is down 13%, the Nikkei down 8%, and European markets are also trading in negative territory. This global market weakness has extended to the cryptocurrency market, with Bitcoin falling below $80,000 levels.
This market downturn appears to be exacerbated by broader economic concerns. President Donald Trump’s recent announcement of sweeping tariffs on goods from over 100 countries has raised anxieties about its potential toll on the broader U.S. economy and consumer spending. The situation is further complicated by China’s reciprocal tariffs, which are higher than anticipated and are escalating the ongoing trade war. Consequently, both traditional markets and cryptocurrencies are currently under pressure. Our take on market crash risk right now has more details on tariffs and its impact on the broader market.
Despite the earlier surge, we believe that the current market environment and our underlying analysis of Strategy Inc. make its stock unattractive at its current levels. Our negative view is rooted in our assessment that the company’s current valuation is excessively high.
We have reached this conclusion by comparing MSTR’s present valuation with its operating performance in recent years, as well as its current and past financial health. Our analysis, which considers Growth, Profitability, Financial Stability, and Downturn Resilience, reveals that Strategy demonstrates very weak operating performance and financial condition, as we will elaborate on below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
How Does Strategy’s Valuation Look vs. The S&P 500?
Going by what you pay per dollar of sales or profit, MSTR stock looks very expensive compared to the broader market.
• Strategy has a price-to-sales (P/S) ratio of 138.2 vs. a figure of 3.2 for the S&P 500
How Have Strategy’s Revenues Grown Over Recent Years?
Strategy’s Revenues have fallen over recent years.
• Strategy has seen its top line shrink at an average rate of 3.2% over the last 3 years (vs. increase of 6.3% for S&P 500)
• Its revenues have declined 6.6% from $496 Mil to $463 Mil in the last 12 months (vs. growth of 5.2% for S&P 500)
• Also, its quarterly revenues decreased 3.0% to $121 Mil in the most recent quarter from $124 Mil a year ago (vs. 5.0% improvement for S&P 500)
How Profitable Is Strategy?
Strategy’s profit margins are considerably worse than most companies in the Trefis coverage universe.
• Strategy’s Operating Income over the last four quarters was $-63 Mil, which represents a very poor Operating Margin of -13.6% (vs. 13.0% for S&P 500)
• Strategy’s Operating Cash Flow (OCF) over this period was $-53 Mil, pointing to a very poor OCF-to-Sales Ratio of -11.4% (vs. 15.7% for S&P 500)
Does Strategy Look Financially Stable?
Strategy’s balance sheet looks weak.
• Strategy’s Debt figure was $7.2 Bil at the end of the most recent quarter, while its market capitalization is $65 Bil (as of 4/4/2025). This implies a strong Debt-to-Equity Ratio of 11.3% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $38 Mil of the $26 Bil in Total Assets for Strategy. This yields a very poor Cash-to-Assets Ratio of 0.2% (vs. 14.8% for S&P 500)
How Resilient Is MSTR Stock During A Downturn?
MSTR stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on MSTR stock? Our dashboard How Low Can Strategy Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.
Inflation Shock (2022)
• MSTR stock fell 89.3% from a high of $127.29 on 9 February 2021 to $13.66 on 29 December 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 4 March 2024
• Since then, the stock has increased to a high of $473.83 on 20 November 2024 and currently trades at around $295
Covid Pandemic (2020)
• MSTR stock fell 41.7% from a high of $15.81 on 12 November 2019 to $9.22 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 16 September 2020
Global Financial Crisis (2008)
• MSTR stock fell 75.9% from a high of $13.24 on 26 February 2007 to $3.19 on 20 November 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 30 March 2011
Putting All The Pieces Together: What It Means For MSTR Stock
In summary, Strategy’s performance across the parameters detailed above are as follows:
• Growth: Very Weak
• Profitability: Extremely Weak
• Financial Stability: Weak
• Downturn Resilience: Weak
• Overall: Very Weak
Given MSTR’s weak performance on the aforementioned parameters and its extremely high valuation, we believe that the stock is an unattractive investment and a poor choice for buying at this time. Adding to our concerns, the ongoing trade war and macroeconomic uncertainties suggest potential near-term pressure on Bitcoin, which would further negatively impact MSTR.
While you would do well to avoid MSTR stock for now, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
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