Strategy Inc., listed on NASDAQ as MSTR, has undergone a significant downturn in market value since reaching its peak price of $543 in November 2024. As of December 31, 2024, the shares were trading near $156, reflecting a decline of roughly 71% from the recent high.
This steep drop in valuation correlates with growing unease over the company’s capital allocation decisions and looming risks tied to index inclusion criteria imposed by MSCI. These challenges are converging to present a complex situation for Strategy Inc.'s management and stakeholders heading into early 2025.
Capital Issuance and the Impact on Shareholders
On July 31, 2024, Strategy communicated a clear equity issuance policy within its earnings presentation. The guidance specified that the company would refrain from issuing common stock below 2.5 times its market net asset value (mNAV), except where such issuance was intended to cover interest payments on debt or to fund preferred equity dividends.
At the time, Strategy was committed to maintaining annual preferred dividends of $824 million. However, in subsequent months, the company issued a substantial amount of common stock totaling approximately $4.9 billion. Notably, about $4 billion of this issuance occurred at valuations under 1.0x mNAV during November and December, considerably below the previously detailed threshold.
While Strategy asserts it aims for preferred dividend coverage equivalent to two years, amounting to around $1.6 billion of the recent common stock issued, the remaining $3.3 billion represents shares sold at levels considered dilutive and contrary to their own five-month-old guidance. This significant departure from declared capital discipline has prompted criticism among market observers.
Highlighting this issue, crypto analyst Novacula Occami publicly addressed the discrepancy on December 30, calling attention to what was seen as a breach of Strategy’s own capital allocation framework announced earlier in the year.
MSCI Index Exclusion Threat: A Pivotal January Event
Looking ahead, a critical event looms on January 15, when MSCI is scheduled to decide on the continued inclusion of Strategy in its Global Investable Market Indexes. MSCI's proposal centers on excluding companies with digital asset holdings exceeding 50% of their total assets from these indexes. Strategy, with a significant portion of its balance sheet allocated to digital assets—primarily Bitcoin—faces the risk of delisting if the threshold is applied.
JPMorgan analysts have projected that such exclusion by MSCI could force approximately $2.8 billion in selling pressure on Strategy shares. Furthermore, if other major index providers such as S&P Dow Jones Indices and FTSE Russell enact similar exclusions, the total forced outflows could escalate sharply, reaching as much as $8.8 billion.
Supporters of the exclusion view it as a necessary adjustment to index composition standards, given the unique risks posed by concentrated holdings in volatile digital assets. Conversely, traders on Polymarket assign a 76% probability to Strategy's removal from major indexes by March 31, 2026, signaling strong market conviction about the likelihood of exclusion events within the coming years.
Defense from Strategy’s Leadership
In response to growing concerns, Strategy’s executive team issued a letter dated December 10, jointly signed by Executive Chairman Michael Saylor and CEO Phong Le. The letter emphatically stated that the company is an operating business rather than a passive investment fund or a tracking vehicle, challenging the premise behind the proposed index exclusion.
They argued that Bitcoin holdings are employed as productive capital to generate returns via digital credit instruments rather than merely serving as passive asset storage. Furthermore, Strategy highlighted that the MSCI 50% digital asset holding limit appears arbitrary, noting that companies in traditional sectors such as oil, real estate, and timber manage significant concentrations of single-asset reserves without facing similar index penalties.
The letter also suggested that the MSCI proposal could suppress innovation within the digital assets industry and would conflict with pro-innovation U.S. policies, referencing the administration in office during the period.
Technical Share Price Performance
From a technical perspective, Strategy's stock price dynamics reinforce the bearish narrative. TradingView chart analysis shows the share price trapped within a descending channel pattern, with resistances at the Supertrend indicator value of approximately $185.36 and the Parabolic SAR near $176.69.
To mount a meaningful price recovery, the stock must first exceed the $176.69 resistance level, which would require a potential upward movement of roughly 13.5% from current prices. Failure to maintain support levels around $155 could open the door for further declines, possibly pushing the share price toward the $140-$145 range. Should selling pressure intensify, the stock may endure more severe losses that push values toward the $100 mark.
Conclusion
Strategy Inc. currently confronts a multifaceted challenge involving dilutive capital raises beyond its stated guidance, significant index inclusion risks tied to digital asset holdings, and technical factors that suggest continued bearish momentum unless critical price levels are reclaimed. The company's leadership maintains a position defending operational business fundamentals and cautions against potential industry innovation constraints if exclusion policies come into effect.
As January 15 approaches, investors will be closely monitoring MSCI’s decision, which may serve as a major catalyst impacting Strategy’s share performance and market positioning in the year ahead.