Strategy MSTR
What does Strategy do?
Strategy, until recently known as MicroStrategy, is a US company with two very different lines of business. Historically, it develops enterprise software for business intelligence and analytics. This includes platforms such as Strategy One, which give users without technical expertise access to data and analyses, and Strategy Mosaic, a unified data layer with consistent definitions and governance across different data sources.
Today the company is defined by its role as a bitcoin treasury company. It holds bitcoin as a central asset on its balance sheet and finances its purchase through equity and fixed-income instruments, such as convertible bonds and preferred shares. This gives investors indirect exposure to bitcoin. The software business delivers recurring license, subscription and support revenue, but is of secondary importance for the valuation of the stock. In the software market, the company competes with large vendors such as Microsoft, Salesforce and Qlik; as a bitcoin holder, it occupies a special position among listed companies.
Score profile
Rank vs. Software - Application (71 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Strategy ranks in the bottom fifth in the group Software - Application (1.8/10). On growth, the company ranks in the middle in the group Software - Application (5.4/10). On valuation (higher = cheaper), the stock ranks below average in the group Software - Application (3.8/10). On financial strength, Strategy ranks in the middle in the group Software - Application (5.8/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 7.0x | 18.0x | better than 94 % |
| PEG ratio | 2.9x | 1.4x | better than 19 % |
| EV/EBITDA | -12.3x | 19.7x | better than 0 % |
| Price/book | 0.9x | 5.5x | better than 96 % |
| Revenue growth | -2.5% | 10.8% | better than 11 % |
| Earnings growth | 431.5% | 9.4% | better than 98 % |
| Gross margin | 67.8% | 71.8% | better than 40 % |
| Operating margin | -2.1% | 15.7% | better than 11 % |
| Net margin | 0.0% | 12.3% | better than 18 % |
| Return on equity | -21.6% | 13.2% | better than 5 % |
| Debt/equity | 9.9% | 46.9% | better than 78 % |
| Current ratio | 4.0x | 1.2x | better than 93 % |
| Free cash flow yield | -6.3% | 5.3% | better than 4 % |
| Dividend yield | 0.0% | 1.1% | – |
| Payout ratio | 0.0% | 31.2% | – |
| Beta | 3.61 | 0.96 | – |
Valuation: what is Strategy worth?
For Strategy the data currently does not allow a reliable model range (e.g. negative free cash flow or missing comparables). In this case the Pro analysis assesses the valuation qualitatively.
15 analysts, average rating “Strong buy”, average price target 233.27 USD (+92.7%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Results depend heavily on the price of bitcoin, as valuation changes in the holdings significantly affect profits.
- Access to capital markets determines whether further bitcoin purchases can be financed through shares, convertible bonds or preferred securities.
- The software business provides steady revenue through licenses, subscriptions and maintenance, which partly covers ongoing operating costs.
Risks
- Sharp price swings or a sustained decline in bitcoin can significantly weigh on the company's balance sheet, earnings and ability to raise financing.
- Obligations from debt and preferred dividends must be serviced, although the bitcoin holdings generate no ongoing cash flows.
- Regulatory, tax and accounting changes in the treatment of cryptocurrencies can affect the business model and financing structure.
What to look for with Strategy
The ratio of bitcoin holdings to debt and preferred capital is particularly informative because it shows how resilient the balance sheet is to price fluctuations.