A Look At MicroStrategy (MSTR) Valuation After New Bitcoin Losses And Higher Preferred Dividend
Strategy (MSTR) is back in focus after disclosing an unrealized loss of about US$17.4b on its bitcoin holdings, while simultaneously lifting its preferred dividend rate to 11% and adding more bitcoin to its balance sheet.
See our latest analysis for Strategy.
The stock’s recent moves have tracked Bitcoin’s swings, with a 3.43% 1 day share price return and a 52.14% 3 month share price decline. The 1 year total shareholder return of 58.54% contrasts with a very large 3 year total shareholder return near 8x and a strong 5 year gain. This suggests that long term momentum has been powerful even as shorter term sentiment has cooled.
If you are reassessing risk after Strategy’s latest Bitcoin update, it could be a good moment to scan high growth tech and AI stocks for other potential opportunities in related themes.
After a 2025 share price slump, a very large unrealized Bitcoin loss, and a shift to higher income for preferred holders, the key question is simple: is Strategy now trading below its true value, or is the market already accounting for future growth?
Price-to-Earnings of 6.1x: Is it justified?
At a last close of US$157.16, Strategy is trading on a P/E of 6.1x, which screens as low compared to both peers and the wider US market.
The P/E ratio compares the company’s share price with its earnings per share, so a lower P/E can suggest the market is paying less for each dollar of current earnings.
For Strategy, several checks point in the same direction. The P/E of 6.1x is below the US market level of 19x, and it is also flagged as good value against peers and the broader software industry. Internal fair ratio work indicates that a P/E of 56.3x could be consistent with similar companies, which is a very large gap to where the shares currently sit.
Against software peers, that contrast is even sharper. The 6.1x P/E is well below the peer average of 57.1x and the US software industry average of 31.7x. This implies the market is pricing Strategy’s earnings at a steep discount to comparable companies and to the level the fair ratio suggests could be achievable if sentiment and assumptions moved closer to the group.
Explore the SWS fair ratio for Strategy
Result: Price-to-Earnings of 6.1x (UNDERVALUED).
However, you still need to weigh the concentrated Bitcoin exposure and the higher 11% preferred dividend, both of which could limit flexibility if conditions change.
Find out about the key risks to this Strategy narrative.
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