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Strategy•2026-03-03

Why I Invest on MSTR

Why I Invest on MSTR

When a company announces it’s issuing billions of dollars in new shares, traditional stock market logic dictates that its stock price will plummet due to dilution. Yet, when Michael Saylor’s Strategy (MSTR) announces a massive share offering to buy more Bitcoin, the stock often goes up.

How is this possible? Why do investors keep flocking to a company that continuously dilutes its shares? To understand this phenomenon and why MSTR acts as a leveraged play on Bitcoin, we need to dive into some financial engineering concepts: NAV (Net Asset Value), ATM offerings, Convertible Bonds, and Preferred Stocks.

The Concept of NAV and the MSTR Premium

To evaluate MSTR, we must first understand its Net Asset Value (NAV). Simply put, NAV is the total value of the Bitcoin MSTR holds minus its debt, divided by the number of outstanding shares. This gives us the Bitcoin value per share.

Logically, MSTR’s stock price should equal this NAV. However, MSTR consistently trades at a NAV Multiple (or Premium) higher than 1—often trading at double its underlying Bitcoin value. Why are people willing to pay a premium?

Here are a few easily understandable reasons:

  1. Bitcoin Proxy: For many investors globally, buying spot Bitcoin ETFs is restricted (e.g., Vanguard users, certain UK retirement accounts, or investors in countries with high crypto taxes like Japan). MSTR serves as an accessible proxy to invest in Bitcoin.
  2. Options Yield: Holding MSTR shares allows investors to sell covered calls and generate lucrative option premiums, an advantage you don't get by just holding raw Bitcoin.
  3. Index Inclusion: MSTR is included in major indices like the Nasdaq 100. This forces passive index funds to buy the stock regardless of the price, creating constant demand.

The Real Reason: The Growth Expectation

While the reasons above are valid, the true reason for the premium is the expectation of future Bitcoin accumulation. Just like a high P/E ratio on a tech stock reflects expectations of future earnings growth, MSTR's high NAV multiple reflects investors' belief that the company will successfully acquire even more Bitcoin in the future.

Financial Engineering: How Does MSTR Keep Buying?

Strategy's true genius lies in how it funds its Bitcoin purchases. Here are their three main tools:

1. ATM (At-The-Market) Offerings Unlike traditional stock offerings, ATM allows MSTR to sell shares gradually at market price. Because MSTR’s stock trades at a premium (e.g., a multiple of 2), selling new shares and buying Bitcoin actually increases the NAV per share. This is known as accretive dilution. The pie gets sliced into more pieces, but the pie itself grows so fast that each slice becomes more valuable.

2. Convertible Bonds (CBs) into the Fixed-Income Market MSTR has tapped into the massive $300 trillion fixed-income market. They issue Convertible Bonds with mind-bogglingly low interest rates—sometimes even 0%! Why would bond investors accept 0% interest? Bec

ause these bonds come with a conversion option. If MSTR’s stock price skyrockets, the bondholders can convert their principal into MSTR shares. They are essentially giving up yield for the massive upside potential of Bitcoin.

3. Preferred Stock (STRK & STRF) Recently, MSTR introduced preferred stocks. These offer a fixed dividend yield (appealing to traditional fixed-income investors) and, in the case of STRK, the option to convert into common stock at a very high future price. For common shareholders, this is fantastic news because it raises capital with zero immediate dilution to the common stock.

Conclusion: A Leveraged Bet on Bitcoin

At its core, Strategy is a leveraged investment vehicle for Bitcoin. If you believe, like Michael Saylor, that fiat currencies will continuously inflate and Bitcoin’s limited supply will drive its price up, MSTR’s strategy is incredibly logical.

Of course, this comes with immense volatility and risk. If Bitcoin enters a prolonged bear market, MSTR’s heavy debt load and premium could collapse. There is no such thing as "low risk, high return." But for investors looking to aggressively outpace Bitcoin's already stellar returns, MSTR's financial engineering masterclass offers a unique, albeit risky, opportunity.