The enterprise mNAV ratio of Strategy, headed by Michael Saylor, fell below 1. This ratio is calculated by dividing the company’s total business value by its holdings of bitcoin reserves. The last chart showed that the market’s valuation of the entire company fell below the total value of the bitcoins it owns.
Share decline weighed on valuation
Strategy stock fell to around $82, remaining about 85% below the peak seen in November 2024. With this decline, the company’s enterprise value decreased to 50.4 billion dollars. At the level where the Bitcoin price was 60,000 dollars, the total value of the bitcoins held by Strategy was calculated as approximately 51.1 billion dollars.
At current levels, the market is pricing the company at a lower value than its entire holdings of bitcoins.
This makes the issuance of new shares more sensitive. Because if the company sells new shares at these levels, it will have issued equity below the value of the assets on its balance sheet. This could have a dilutive effect on existing shareholders.
New financing options are being discussed
Enterprise mNAV is calculated by dividing the enterprise value, which is created by evaluating the market value of all common shares in circulation, total debt, perpetual preferred shares and dollar reserves, to bitcoin reserves.
Mini dictionary: mNAV is used as a ratio that shows how much the market value of a company or investment instrument is traded at a premium or discount compared to its net assets. A ratio below 1 indicates that the market value has fallen behind the total value of the underlying assets.
The company’s ability to issue new shares technically continues. However, due to criticism that some recent bitcoin purchases have a dilutive effect on ordinary shareholders, it is considered that a similar step may attract a reaction again.
The closed-end fund analogy came to the fore
The main concern in the market is that Strategy is increasingly being priced more like a closed-end fund than an operating software company. In the past, similar instruments such as the Grayscale Bitcoin Trust have traded above their asset values during periods of strong demand and faced permanent discounts when investor interest weakened.
In closed-ended structures, this discount often becomes difficult to close. The main reason for this is that there is no effective buyback or redemption mechanism to establish a balance between the share price and the underlying asset value.
Unlike traditional closed-end structures, Strategy has tools such as debt or equity issuance, securities repurchase or refinancing, cash flow generation from software activities and active management of the capital structure.
However, it is emphasized that Strategy is not a passive investment tool. The company’s ability to generate cash flow from its software business and actively manage its debt and capital structure are among the main factors that distinguish it from classical closed-end structures.
