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MicroStrategy’s mNAV Drops: Analysts Warn of Slower Capital Issuance and Bitcoin Momentum
MicroStrategy is once again under the spotlight as its premium over Bitcoin holdings continues to decline, even after reporting a $2.8 billion net income beat for the third quarter, according to Bloomberg data. The company, which transformed from a traditional enterprise software firm into a Bitcoin-centric powerhouse under co-founder Michael Saylor, now trades at roughly 1.3× its market-adjusted net asset value (mNAV)—a stark contrast to the 2× multiples seen during earlier stages of its Bitcoin accumulation strategy.
The mNAV Decline Sparks Analyst Concerns
MicroStrategy’s valuation has long been tied to its Bitcoin treasury, with investors closely watching both the size of its holdings and the premium assigned to them. However, analysts are raising caution as the premium over Bitcoin falls, potentially affecting the company’s ability to raise capital on favorable terms in the coming months.
Following the earnings call, at least three analysts—from Cantor Fitzgerald, TD Cowen, and Maxim Group—lowered their price targets, pushing the average to its lowest point since May. Analysts cited several factors influencing the downgrade:
- Slower Bitcoin price appreciation at the start of Q4
- Reduced mNAV premium
- Declining pace of capital issuance
Despite these concerns, all three firms maintained buy-equivalent ratings, signaling confidence in the company’s long-term strategy even amid short-term volatility.
Q3 Bitcoin Gains and Slower Momentum
MicroStrategy reported $3.9 billion in unrealized gains on its Bitcoin holdings for the third quarter, reflecting previous price increases. However, momentum has slowed as the fourth quarter begins, with analysts noting a marked reduction in capital issuance and Bitcoin yield.
TD Cowen analyst Lance Vitanza explained to clients:
“4Q is off to a slow start, with reduced Bitcoin price appreciation and a dramatic reversal in Bitcoin premium leading to a very slow pace of capital issuance and quarter-to-date BTC yield measured in basis points rather than percentage points.”
This highlights that, while Bitcoin remains a valuable asset on MicroStrategy’s balance sheet, the pace of growth and capital leverage is currently more constrained.
In response to the declining mNAV multiple, MicroStrategy is adjusting its funding strategy. During the earnings call, Michael Saylor announced plans to increase yields on preferred shares, marking this as the company’s primary financing method going forward.
“We are kind of in an inflection point we believe, our multiple of net asset value has been trending down over time as the Bitcoin asset class matures and the volatility decreases,” Saylor said.
The higher yield aims to attract demand even as the Bitcoin premium softens, ensuring reliable funding for future acquisitions.
CEO Phong Le added that MicroStrategy is exploring international markets and exchange-traded funds (ETFs) backed by preferred shares to raise additional capital. The company currently faces approximately $689 million in annual interest and dividend expenses, emphasizing the need for stable funding sources.
Equity analyst Mark Palmer of Benchmark Equity Research noted that the increase in yield should have modest additional expense relative to the capital MicroStrategy could raise and the Bitcoin it could acquire. Palmer continues to maintain a buy rating on the company.
mNAV and the Road Ahead
The company’s mNAV multiple is a crucial metric for investors. During the early stages of MicroStrategy’s Bitcoin strategy, the multiple exceeded 2×, reflecting strong investor enthusiasm for the company’s transformation into a Bitcoin treasury. Today, at roughly 1.3×, the lower multiple reduces the company’s ability to leverage its holdings for capital market activity.
Cantor Fitzgerald analyst Brett Knoblauch highlighted that MicroStrategy would require Bitcoin to hit $150,000 by year-end to meet its $20 billion Q4 operating income guidance, while Bitcoin currently trades just above $110,000—never having surpassed $127,000.
Knoblauch also noted historical parallels, pointing to the Terra-Luna collapse, when MicroStrategy’s mNAV temporarily fell below 1× before rebounding. Despite the lower premium, analysts remain cautiously optimistic about the company’s long-term Bitcoin strategy.
Stock Performance and Market Sentiment
Following the earnings announcement, MicroStrategy shares rose as much as 7% on Friday, yet remain over 40% below their all-time peak reached in November 2024. The market appears to be balancing the company’s strong earnings and Bitcoin gains against the slower pace of capital issuance and reduced premium, leaving investors cautiously optimistic but watchful.
MicroStrategy’s evolution from a modest software firm to a Bitcoin-focused corporate giant has made it a bellwether for the wider crypto market. As the fourth quarter unfolds, all eyes will be on Bitcoin price movement, mNAV trends, and MicroStrategy’s ability to secure funding through its preferred share strategy.
