MicroStrategy (MSTR) is facing significant financial headwinds as analysts highlight severe dilution pressure and a negative enterprise value net asset value (mNAV) for the first time. The company's aggressive funding strategy to acquire Bitcoin has raised concerns about its long-term positioning and financial health.
According to CryptoQuant reports, MicroStrategy's sale of $700 million in stock last week has triggered dilution and continued downside pressure on MSTR shares. The stock is currently down 70% from its all-time high, with shares declining about 55% over the past 12 months and 36% year-to-date. This contrasts sharply with Bitcoin's 3.6% drop this year. MicroStrategy's market value has fallen to around $45 billion while its Bitcoin holdings are worth approximately $60 billion.
"Balance sheet leverage comes at a cost," one analyst noted, pointing to the company's use of at-the-market (ATM) equity offerings and convertible debt to finance Bitcoin purchases. The company has raised over $900 million from ATM sales to buy additional Bitcoin, resulting in basic shares outstanding increasing approximately 20% year-to-date as of December 2025. Analysts warn that tighter capital markets could exacerbate dilution if the company continues issuing shares or debt.
The recent $1 billion Bitcoin purchase, funded partially via equity and debt, has contributed to the stock's underperformance. There have been brief periods when MicroStrategy's market value fell below the value of its Bitcoin holdings, highlighting investor fears over leverage and future share issuances.
Adding to the concerns, MicroStrategy's enterprise value net asset value (mNAV) turned negative for the first time, dropping to 0.988. This occurred as its enterprise value fell to $59 billion while the valuation of its Bitcoin holdings stood at $59.7 billion. The basic market capitalization-based net asset value dropped to 0.763, indicating the premium the company enjoyed months ago has disappeared.
The ongoing Bitcoin crash from its year-to-date high of $126,200 to current levels around $88,800 has significantly reduced the value of MicroStrategy's Bitcoin holdings. Technical analysis shows Bitcoin has formed bearish chart patterns including a death cross and bearish pennant, potentially signaling a drop to $80,000.
MicroStrategy still has more than $11.8 billion remaining in its ATM offerings, indicating further dilution is expected. The company's outstanding shares have ballooned to over 267 million, up from 93.2 million in 2022.
Index inclusion concerns add another layer of uncertainty. Global index provider MSCI has flagged worries about digital asset treasury companies in its benchmarks and is due to decide in January whether to exclude MicroStrategy and similar companies. While CEO Michael Saylor remains bullish about a favorable outcome, analysts estimate that removal from major indices could trigger passive fund outflows of about $1.6 billion. Such a decision would also create a ripple effect affecting over 200 digital asset treasury companies globally.
