Strategy Just Broke Its Biggest Bitcoin Rule. What It Means for MSTR Stock.
For years, Strategy (MSTR), formerly MicroStrategy, has built its reputation on one simple yet powerful idea: buy Bitcoin (BTCUSD) and never sell it. The company’s long-standing strategy has been centered around accumulating and holding onto Bitcoin, a decision that has made it the world’s largest corporate Bitcoin owner. However, this week, the company made a significant shift in its approach, selling $216 million worth of Bitcoin to help fund preferred stock dividends.
This move surprised investors, as it marked a clear departure from the company’s buy-and-hold strategy. The sale of 3,588 Bitcoin last week under a new treasury framework aimed at supporting preferred stock obligations and boosting liquidity reduced its holdings to 843,775 Bitcoin, acquired at an average cost of $74,476 per token.
The company’s decision to sell Bitcoin has significant implications for its stock price. Strategy’s stock has remained one of the most volatile names in the market, closely tied to Bitcoin prices. Following news of the $216 million Bitcoin sale, shares fell roughly 6% as investors questioned whether the company was moving away from its long-standing accumulation strategy. The decline followed a sharp rally of more than 22% the previous week, driven by renewed optimism around Bitcoin and large institutional buying.
Over the past year, MSTR stock has fallen roughly 75%, while the stock remains down about one-third year-to-date (YTD). Investors have worried about dilution from repeated preferred stock offerings and convertible debt issued to finance additional Bitcoin purchases. The company’s recent struggles have been exacerbated by weaker Bitcoin prices and a net loss of $12.5 billion, or $38.25 per share, largely due to a $14.5 billion unrealized Bitcoin loss under new accounting rules.
Despite the headline loss, the company’s underlying software operations remained stable. Strategy finished the quarter with about $2.21 billion in cash while holding roughly 818,000 Bitcoin, making it the world’s largest corporate Bitcoin owner. Management believes the business can return to adjusted profitability during 2026 as software revenue and digital credit products continue to grow.
Strategy is no longer just a software company with a Bitcoin treasury. Over the past year, it has built a fast-growing digital credit business through preferred securities such as (STRC), (STRF), and (STRD). These products have raised more than $13 billion, with much of the proceeds used to purchase additional Bitcoin. The company has also repurchased about $1.5 billion of convertible debt to strengthen its balance sheet.
More importantly, the board recently approved new capital management policies allowing management to sell Bitcoin, repurchase shares, or buy back preferred stock whenever it believes doing so creates shareholder value. Last week’s Bitcoin sale appears to be the first major example of this more flexible strategy. While the recent Bitcoin sale shook things up, Wall Street continued to be relatively bullish on MSTR stock.
Earlier this year, TD Cowen upgraded its price target for the stock to $400. The firm has maintained a consistent and ‘aggressive’ rate of purchase for Bitcoin, leaving it the owner of approximately 4% of the total amount of Bitcoin mined to date. While Mizuho cut its $265 price target to $213, it maintained its ‘Outperform’ rating as it believes that much of Bitcoin’s recent decline is already priced in.
Overall, Strategy has a ‘Strong Buy’ consensus, and the recent mean price estimate is around $318, implying that MSTR stock could more than triple from its price level in the coming year. The company’s decision to sell Bitcoin may mark a turning point in its strategy, but it remains to be seen how this move will impact its stock price and overall business performance.
