MicroStrategy (NASDAQ:MSTR) is a development inventory with an uncommon historical past. It began life as a software program firm however in late 2020, it started shopping for cryptocurrency as a way of shoring up its steadiness sheet. It now claims to be the “largest corporate holder of Bitcoin in the world”.

And it seems to have caught the eye of many traders on each side of the Atlantic.

Of the 11 US analysts protecting the corporate, 10 contemplate it a Purchase.

Nearer to dwelling, in the course of the week ended 3 January, it was the preferred inventory with Hargreaves Lansdown’s purchasers. Of all that week’s purchases on the platform, MicroStrategy noticed essentially the most exercise, each when it comes to trades (3.21%) and the worth of offers positioned (5.04%).

An prolonged bull run

Not surprisingly, this curiosity has helped drive its price larger.

Since January 2024, it’s elevated by 470%.

And this spectacular efficiency reveals no indicators of slowing down. Helped by the prospect of a second Trump presidency (he’s seen as being extra pro-crypto than Joe Biden) in the course of the first eight days of 2025, the inventory’s up 18%. Previous efficiency just isn’t an indicator of future efficiency although, after all.

However a better take a look at the statistics is revealing.

Though it was the post-Christmas primary with Hargreaves Lansdown’s patrons, it was additionally common with sellers, accounting for 4.55% of all trades.

This could possibly be an indication that the inventory’s being purchased with a view to creating a fast revenue, relatively than for its long-term development prospects.

It may additionally clarify why it’s essentially the most unstable inventory on the S&P 500. Though its accomplished nicely in 2025, I feel it’s price noting that it’s fallen 28% from its November 2024 peak.

Trying to the longer term

However the firm does have a development technique, albeit a easy one. It plans to purchase extra Bitcoin, and plenty of it.

Over the following three years, it hopes to buy $42bn of the digital asset.

Nonetheless, provided that MicroStrategy’s software program enterprise isn’t money generative — in the course of the 9 months ended 30 September 2024, it reported a post-tax lack of $48m — the entire funds must come from a mix of debt ($21bn) and fairness ($21bn).

And so long as Bitcoin doesn’t crash, I’m certain all the things will probably be okay. In any other case, I concern it’ll be catastrophic for the corporate and its shareholders.

The content material on this article is offered for info functions solely. It isn’t meant to be, neither does it represent, any type of funding recommendation. Bitcoin and different cryptocurrencies are extremely speculative and unstable property, which carry a number of dangers, together with the overall lack of any monies invested. Readers are chargeable for finishing up their very own due diligence and for acquiring skilled recommendation earlier than making any funding selections.

Leverage

Newest reviews counsel that the corporate at present owns 447,470 Bitcoin, price roughly $43bn. Its market cap is $84bn — 95% larger.

In different phrases, traders are glad to pay extra for the Bitcoin held by MicroStrategy than in the event that they purchased it instantly themselves.

To my shock, this implies its share price has outperformed the worth of the cryptocurrency over the previous 12 months by an element of 4.  

This doesn’t seem sustainable to me.

And it means that if the worth of Bitcoin falls, the inventory market valuation of MicroStrategy will crash by much more.

Personally, I don’t need to add this degree of danger (or volatility) to my share portfolio. I’m subsequently going to avoid MicroStrategy, regardless of the hype surrounding the inventory.