So MSTR has kind of behaved strangely in the past couple months.

Looking at a 3-mo horizon, BTC is up +13.9%, while MSTR is -11.3% as I am writing.

I can understand if BTC is up more than MSTR. Even understand if BTC is up and MSTR is kind of flat.

But they have gone opposite direction pretty significantly these past 1-2 months – and of course the mNAV has compressed quickly and significantly, from 1.8x just a month ago to ~1.4x currently.

So the question is – is the MSTR premium over and it will continue compressing to 1? Or is it just a temporary setback that will correct itself?

The strangest part

If BTC is in a bear market, I can understand the mNAV multiples would collapse quickly and MSTR price would shrink multi-fold.

But BTC has been hitting ATH – despite it being a slow grind and the fear/greed is still floating between neutral and barely greedy.

So I will be honest – I am not too sure why the sentiment on MSTR is negative.

And quite negative to a point that it can go in reverse direction as BTC is going up.

Anyway even without understand the “cause” per se, there are 2 possible scenarios:

The Bear Case

Let’s start with the bear case argument – which is MSTR is not really worth much of a premium, and a 1x mNAV is what is close to reasonable.

Since they are just buying BTC with ATMs or issuing debt at decently high interest rate – these are things an individual investor can do themselves and there is no need to pay extra for MSTR.

And with the new prefer shares, the debt servicing would need to be funded either by ATMs or sale of bitcoin, which both will hurt the share price in the long run.

Therefore, 1x premium is the “fair value” and it is still overvalued at 1.4x.

The Bull Case

The other side of the argument is – MSTR is worth the premium, and even though the premium will collapse as MSTR grows bigger, it should be a slow collapse and shareholders will definitely make way more money than holding BTC over the years.

Because they are raising debt in a way that an individual investor cannot, and also they are tapping HUGE capital markets and can leverage effectively, they are yielding more BTC per share and therefore making “bitcoin gains” for shareholders.

For example, if their BTC yield is 10% per year, that mean if I hold 1 share of MSTR and it’s worth X bitcoins today, next year it will be worth 1.1X bitcoins – regardless of the share price.

10% per year for 7 years – and my 1 share of MSTR will be worth 2X bitcoins.

In other words, if I pay a 2x mNAV premium right now for MSTR, given a 10%/year BTC yield, in 7 years MSTR will have “made the premium back” and justify my investment even if it went to 1x.

On the other hand, if in 7 years MSTR is at 1.5x instead of 1x in that scenario, I would have made 50% more gains than investing in just BTC myself.

Also, if their BTC yield isn’t just 10%, it’s 15% or 20% per year, then it could be 3-5 years until a doubling of bitcoin per share happens.

In fact the bitcoin yield is so high in recent years, it went double just from 2023 to 2025, in 2 years.

So as long as there is bitcoin yield, there should be a premium, and if a premium continues to hold, then shareholders will always make bigger gains than BTC itself – although the outsized growth will again continue to shrink over time.

The Verdict

So first of all, I think the 1x bear argument is invalid.

If I think about copying MSTR and doing it myself, first of all I can get a loan for <8-10% interest, but I cannot make it perpetual without paying down principal.

Also I cannot borrow such loan in big amount without collateral that doesn’t trigger a margin call if the collateral falls in value. (maybe only a small amount as a personal loan)

So as long as BTC grows beyond the 8-10% interest rate they are paying out per year, MSTR is efficiently making gains and growing asset value that I cannot do as an individual person.

And BTC growing at 10%+ would be the super bear case. QQQ or even gold can easily beat that, especially going forward where fiat is getting more and more worthless and printing runs hotter and hotter (nothing stops this train).

The premium is justified and the question is, what is the “fair multiple”?

Just by looking at historical multiples it was around 2-3x for a while. Recently it has float more around the 1.8-2x range and dropped of a cliff since last month to 1.4x right now, the lowest in recent months.

Looking back just now, I realized the last time it felt below was Jan 2024. Interestingly that was also a period where the BTC yield was super high, BTC itself was grinding up slowly from 20k to 40k during 2023, before a big jump from 40k to 70k in early 2024.

And MSTR mNAV jumped from ~1.3x at the lowest, up to 3x+ before calming down around 2x for the most of 2024.

(And that’s where my memory starts – MSTR is a ~2x mNAV company)

I think it would be reasonable for MSTR to jump back up to at least 2x in the next BTC super bull run – if it actually happens.

If it doesn’t, I think MSTR should still float between 1.5-2x as a “reasonable” multiple for their BTC yield.

I will update this post as I get more educated about MSTR and be able to derive a more logically calculated “fair multiple”.