Strategy Incorporated (MSTR): A Bear Case Theory

We came across a bear thesis on Strategy Incorporated on Valueinvesting subreddit by stickty. In this article, we will summarize the bulls’ thesis on MSTR. Strategy Incorporated’s share was trading at $342.06 as of August 27^th. MSTR’s trailing and forward P/E were 23.99 and 7.72              respectively according to Yahoo Finance.

MicroStrategy (MSTR), once known for its enterprise software business, has seen that side of operations stagnate, with flat-to-declining revenues rendering it largely irrelevant to the company’s valuation. The investment narrative has shifted entirely to Bitcoin, turning MSTR into a leveraged proxy for the cryptocurrency rather than a value-creating enterprise. The company has adopted what some call a “perpetual dilution machine” model: issuing debt and selling new shares to buy additional Bitcoin.

Because MSTR stock consistently trades at a steep premium to the value of the Bitcoin it holds, this cycle increases Bitcoin per share for existing investors—so long as new buyers continue paying inflated prices. Yet this setup leaves current shareholders exposed, as they are effectively paying a 2x or greater premium over direct Bitcoin ownership. Cheaper, more direct vehicles like spot or leveraged Bitcoin ETFs undermine the logic of buying MSTR, raising questions about the sustainability of its premium. Much of the company’s market appeal hinges on executive chairman Michael Saylor’s salesmanship and his ability to cultivate a near-cult following around the “number go up” thesis.

Critics argue that MSTR’s current structure and valuation depend less on fundamentals and more on investor belief in Saylor’s narrative. Combined with a history of value-destroying episodes—such as MicroStrategy’s dramatic collapse during the dot-com bust—these dynamics create a precarious setup. As long as new capital continues flowing in, the model functions; if not, the premium could evaporate quickly, leaving MSTR shareholders overexposed to both Bitcoin volatility and narrative-driven risk.

Previously we covered a bearish thesis on Strategy Incorporated (MSTR) by Charly AI in May 2025, which highlighted deteriorating software operations, high leverage from Bitcoin accumulation, and a fragile balance sheet. The company’s stock has depreciated ~10% since our coverage. The thesis still stands as fundamentals remain weak. Stickty shares a similar view but emphasizes the risks of MSTR’s narrative-driven premium.

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Disclosure: None.