3 Things Every Strategy Investor Needs to Know
Key Points
Strategy shares provide investors with a leveraged play on Bitcoin, with amplified gains and losses.
If it generates positive free cash flow, the presence of an enterprise software platform can support dividend and interest payments.
Buying the stock while it's trading on a huge dip has been a lucrative move in the past.
- 10 stocks we like better than Strategy ›
During the five-year period leading up to Aug. 11, 2020, shares of Strategy (NASDAQ: MSTR), previously called MicroStrategy, declined 37%. In the roughly five and a half years since, they have skyrocketed 863% (as of Feb. 27). This nearly 10-fold gain, which beats the performance of every "Magnificent Seven" stock except Nvidia, has happened despite the fact that the share price is 73% below the peak from November 2024.
That sudden shift in performance is due Strategy becaming a Bitcoin treasury company in August 2020. This is a unique situation in the world of capital markets, requiring investors to take the time to understand what factors matter most.
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Here are three things you should know about Strategy.
Image source: Getty Images.
Leveraging your bet on Bitcoin
It's essential for investors thinking about buying Strategy shares to also be bullish on Bitcoin. If Bitcoin's price isn't higher than the company's average Bitcoin cost basis of $76,000 five or 10 years from now, then owning this business will be a losing investment.
Strategy is essentially a levered bet on Bitcoin, meaning that the stock price is much more volatile than the crypto. Since Aug. 11, 2020, Bitcoin has climbed 483%, while Strategy is up the mentioned 863%.
Think about the downside as well. The company says that even if Bitcoin's price fell to $8,000, a highly unlikely scenario, the value of its total Bitcoin holdings would cover net debt.
Strategy financially engineers ways to opportunistically raise capital via equity, debt, and preferred offerings to buy Bitcoin and to pay interest and dividends. This is the most important part of the entire operation.
There's a software business in there
Strategy also has an artificial intelligence analytics business that sells software and services to help enterprises better manage and use their data. In 2025, the company collected $477 million in revenue.
Having a traditional business is beneficial to Strategy, particularly if it can generate positive free cash flow to support interest and dividend obligations. This gives Strategy a notable advantage compared to pure-play Bitcoin treasury companies.
Trading well below the record
As of Feb. 27, Strategy owned almost 718,000 Bitcoin units. At the cryptocurrency's recent price of $64,903, this equaled a market value of $46.6 billion. At the same time, the business carries an enterprise value of $57.7 billion, which is about 1.21 times the value of the Bitcoin it has on the balance sheet.
This is a good buying opportunity. Of course, this is because now is a major Bitcoin bear market: The digital asset is trading about 46% off its peak, leading the market to sour on Strategy's strategy.
Investors with a long time horizon and a higher-than-normal risk tolerance might not find a better time to buy Strategy stock than right now. These moments of weakness are fantastic times to purchase the stock.
Should you buy stock in Strategy right now?
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Neil Patel has positions in Strategy. The Motley Fool has positions in and recommends Bitcoin and Nvidia. The Motley Fool has a disclosure policy.
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