MicroStrategy Faces a Challenging Year Ahead: 49% Decline in 2025 and Uncertainty for 2026

MicroStrategy, known for its Bitcoin investments, saw its stock (MSTR) drop by 49.3% in 2025, impacted by ongoing selling pressure that brought shares to their lowest point since late September 2024. As we enter 2026, the outlook remains bleak, with an impending decision regarding its status in the MSCI index adding to the uncertainty.

Key Takeaways

Stock Performance: MicroStrategy's stock fell 49.3% in 2025 due to a struggling crypto market.
Significant Losses: The company lost about $90 billion in market capitalization, with a 66% drop in the last six months.
Bitcoin Holdings: The firm is heavily invested in Bitcoin, owning 672,497 BTC, which is about 3.2% of the total supply.
Valuation Concerns: Currently, MicroStrategy’s Bitcoin holdings are valued at approximately $59 billion, while its market cap is only about $46 billion.
MSCI Decision Impact: A pending MSCI decision could potentially remove MicroStrategy from key indexes, leading to estimated outflows of up to $8.8 billion.

Challenges Faced by MicroStrategy in 2025

In 2025, the cryptocurrency market faced significant challenges, affecting digital asset holdings and, by extension, MicroStrategy's stock performance. Analyzing the numbers, MSTR's value saw a staggering decline of 49.3% last year, with the most substantial losses occurring in the latter half.

MSTR Stock Performance : Google Finance

Analyst Ted Pillows shed light on this downturn, revealing that MSTR saw a dramatic drop of 66% in just the last six months of the year. Almost $90 billion has evaporated from the company’s market capitalization, primarily due to Bitcoin's disappointing performance. The leading cryptocurrency ended the year down 5.7%, contrary to many positive predictions, which heavily impacted MicroStrategy’s stock value.

As the largest corporate holder of Bitcoin—with 672,497 BTC or 3.2% of the total supply—MicroStrategy is intricately linked to Bitcoin's performance. According to reports, the company has invested over $50 billion in Bitcoin, facilitated mostly through debt and stock sales. This contrasts sharply with its software revenue, which only amounts to around $460 million annually, overshadowed by its digital asset investments.

Currently valued at approximately $59 billion, MicroStrategy’s Bitcoin does not equate to its market capitalization of about $46 billion, raising serious concerns regarding its valuation and financial stability. Pillows notes, "It is trading at a 20% to 25% discount, roughly 20% to 25% below the value of its underlying Bitcoin holdings."

Beyond the BTC price fluctuations, Pillows highlighted various other factors contributing to the company's struggles, including:

Aggressive share dilution
Risks concerning index removal
Possible delisting pressures
The complete collapse of the NAV premium

Despite these challenges, MicroStrategy has not shied away from increasing its Bitcoin holdings. The company maintains that its financial position is robust enough to endure significant drops in Bitcoin’s value. "If BTC falls to our $74,000 average cost basis, we still maintain 5.9 times assets to convertible debt, which we refer to as the BTC Rating of our debt. At a price of $25,000 for BTC, that would be 2.0 times," they stated.

MSCI Decision: A Critical Risk for MicroStrategy

While the overall market conditions will continue to evolve, MicroStrategy faces an immediate structural risk tied to an upcoming decision by MSCI. They plan to reclassify firms with digital asset holdings exceeding 50% of their total assets as "funds," potentially excluding them from significant equity indexes.

For MicroStrategy, this decision could have profound implications. The final assessment, expected by January 15, may result in the company's removal from the MSCI indexes.

JPMorgan analysts project that such an exclusion could lead to fund outflows as high as $8.8 billion. This outcome would further pressure MicroStrategy's share price, particularly during a time when investor sentiment is already delicate. Therefore, the results of the MSCI decision are crucial as they could significantly influence MicroStrategy’s stock performance in the near term.