Market expert Shanaka recently explained how a historical event is unfolding with MicroStrategy and its Bitcoin strategy. This comes as the company faces a negative valuation from Wall Street while MSCI considers whether to remove MSTR from its indices.
MicroStrategy’s Market Cap Drops Below the Value Of Bitcoin Holdings
In an X post, Shanaka noted that MicroStrategy, which is the world’s largest corporate Bitcoin holder, is now worth less than its BTC holdings. The company currently holds 650,000 BTC, valued at around $60 billion, while the MSTR stock has a market cap of $55 billion. The expert noted that Wall Street is valuing the company at a negative based on this.
He further remarked that this is the sustained NAV inversion since MicroStrategy began the Bitcoin model in 2020. Shanaka noted that the company has created a $1.44 billion emergency reserve to pay dividends. This came after the CEO Phong Le admitted that they might have to sell BTC to fund dividend payments if the mNAV drops below 1.
MicroStrategy’s woes could deepen as MSCI will decide by January whether to expel the company from global stock indices. MSCI is considering whether companies that hold Bitcoin should be regarded as funds or trusts rather than as companies. JPMorgan estimates the company could see $8.8 billion in outflows if other index providers make a similar move.
Shanaka described the math as “merciless,” noting that MicroStrategy has $8.2 billion in debt, $7.8 billion in preferred stock, and $16 billion in total obligations against a $45.7 billion shell. Meanwhile, the company currently holds its BTC at an average cost of $74,436, which the expert noted is 15% above breakeven. As such, he remarked that one sustained drop erases every gain since 2020.
Shanaka stated that MicroStrategy’s current situation is not just about one company but about whether corporations can hold sound money without being destroyed by the very system they sought to escape. He added that the largest experiment in corporate Bitcoin adoption is breaking in real time.
Saylor Confirms Talks With MSCI Over Potential Exclusion
According to a Reuters report, Michael Saylor confirmed that MicroStrategy is in talks with MSCI over a potential exclusion from their indices. MSCI is expected to decide by January 15 whether to remove digital-asset treasury companies that buy Bitcoin and other crypto assets, amid concerns that they are classified as investment funds.
Saylor opined that MicroStrategy’s potential exclusion from MSCI indices won’t make any difference. He explained that his company is currently leveraged by a multiple of 1.11 and could survive a 95% Bitcoin crash. Meanwhile, it is worth noting that Phong Le has stated that it is unlikely they will sell any BTC over the next three years following the creation of the USD reserves, which should be sufficient for dividend payments during this period.
Featured image from Pngtree, chart from Tradingview.com
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