Is Strategy Stock Yesterday's News?

Strategy (NASDAQ: MSTR) pulled off an incredible comeback by betting big on Bitcoin. The company, which was formerly known as "MicroStrategy," pivoted to investing heavily in Bitcoin in response to soft performance for its legacy software businesses.

Led by CEO Michael Saylor, the company pioneered the Bitcoin treasury strategy. By selling stock and issuing bonds, the crypto-investment specialist was able to raise funds that it then used to buy Bitcoin. Thanks to a stellar bull run for the market-leading cryptocurrency over the last five years, Strategy has been able to deliver fantastic returns for shareholders.

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Over the last five years, Strategy stock has surged roughly 556% -- a performance that significantly exceeds Bitcoin's gain of 414% across the stretch. On the other hand, the stock has been significantly underperforming Bitcoin this year.

Is Strategy's red-hot run drawing to a close?

Despite some periods of elevated volatility, Bitcoin's token price is now roughly flat across 2025's trading. Meanwhile, Strategy stock is down approximately 35% over the stretch.

Strategy's moves to issue stock and take on debt in order to fund Bitcoin purchases have allowed it to post incredible gains in periods when the cryptocurrency's valuation is marching higher. The company's balance sheet is heavily weighted toward Bitcoin holdings, and its market capitalization has tended to post moves that are directionally aligned with the cryptocurrency's token price.

By selling new stock and using the funds to buy Bitcoin, Strategy has typically been able to post outsized gains amid bullish momentum for Bitcoin. Essentially, the company has been able to sell investors newly issued stakes in its Bitcoin treasury -- and then use that money to increase the total number of tokens that it holds.

Based on the assumption that the projected growth outlook for Bitcoin can handily surpass the dilutive effect of selling new stock, many investors have been willing to buy into Strategy stock and send its share price rocketing higher over the last decade. On the other hand, the huge sell-off that has occurred for Strategy stock in 2025 even as Bitcoin has traded flat year to date highlights the risks inherent to this approach.

If Bitcoin's pricing momentum returns to a strong bullish phase, it's reasonable to expect that Strategy stock will enjoy a dramatic rebound. Conversely, the company's share price could plummet if Bitcoin loses ground or even trades roughly flat over the next year.

At its current pricing level, Strategy stock may offer significantly greater upside compared to Bitcoin -- but it also comes with much greater risk. With the crypto market facing some substantial macroeconomic and geopolitical risk factors on the heels of a big valuation run-up over the last five years, investors may be better served by simply investing in Bitcoin, rather than trying to score extra gains with Strategy.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.