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POLAND - 2025/03/02: In this photo illustration, a Bitcoin logo is seen displayed on a smartphone. ... More (Photo Illustration by Mateusz Slodkowski/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
Strategy Inc. (NASDAQ:MSTR), often seen as the largest Bitcoin treasury company, experienced a nearly 2x stock surge over the last twelve months, driven by the significant rally in Bitcoin. However, the stock is currently trending lower, mirroring a significant downturn in global markets today. The Hang Seng index is down 13%, the Nikkei down 8%, and European markets are also trading in negative territory. This global market weakness has extended to the cryptocurrency market, with Bitcoin falling below $80,000 levels.
This market downturn appears to be exacerbated by broader economic concerns. President Donald Trump’s recent announcement of sweeping tariffs on goods from over 100 countries has raised anxieties about its potential toll on the broader U.S. economy and consumer spending. The situation is further complicated by China’s reciprocal tariffs, which are higher than anticipated and are escalating the ongoing trade war. Consequently, both traditional markets and cryptocurrencies are currently under pressure. Our take on market crash risk right now has more details on tariffs and its impact on the broader market.
Despite the earlier surge, we believe that the current market environment and our underlying analysis of Strategy Inc. make its stock unattractive at its current levels. Our negative view is rooted in our assessment that the company's current valuation is excessively high.
We have reached this conclusion by comparing MSTR’s present valuation with its operating performance in recent years, as well as its current and past financial health. Our analysis, which considers Growth, Profitability, Financial Stability, and Downturn Resilience, reveals that Strategy demonstrates very weak operating performance and financial condition, as we will elaborate on below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative - having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
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