MSTR Stock Price Set to Fall to $100 Amid Growing Dilution

The price of MSTR stock has continued to decline as Bitcoin experiences a downturn following MicroStrategy's recent purchasing announcement.

Key Takeaways

MSTR stock has fallen to $156, down from $457, marking a significant drop.
Bitcoin's ongoing price decline poses risks for MicroStrategy as it holds over 672,000 Bitcoins.
Dilution of existing shareholders continues as MicroStrategy raises funds through share sales.
MSTR's technical analysis indicates a bearish outlook, potentially targeting $100.

MSTR stock price eyes a crash to $100 as dilution accelerates - 1

Ongoing Dilution as Strategy Acquires 1,229 Bitcoins

The stock price of Michael Saylor’s MicroStrategy (MSTR) has dropped to $156, significantly down from this year’s peak of $457. This represents the lowest point since September of last year and a decrease of approximately 65% from its highest value this year.

The key challenge facing MicroStrategy is the declining price of Bitcoin (BTC), which has now fallen to $87,275. This drop has created a series of bearish trends, foreshadowing a potential plunge to $80,000 or even lower. Such a decrease would negatively impact MicroStrategy, especially considering its current holding of over 672,000 Bitcoins.

Another pressing issue for the company is that the premium it once enjoyed has vanished. Data from Bitcoin Treasuries indicates that the market capitalization-based market Net Asset Value (mNAV) has dropped to 0.778, while the mNAV based on enterprise value has gone negative for the first time.

A declining mNAV multiple suggests that MicroStrategy is undervalued since its Bitcoin holdings exceed the total value of the company. However, this predicament could complicate the firm's ability to generate cash through convertible bonds.

MicroStrategy has continued to dilute its existing shareholders through at-the-market offerings. Recently, the company announced it purchased 1,229 Bitcoins, funding this acquisition by selling shares worth $108.8 million. There remains $11.6 billion available for raising more capital through additional share sales under the current ATM authorization. Consequently, existing shareholders should anticipate further dilution in the future, with the total outstanding shares ballooning to 267 million from under 80 million just a few months ago.

Technical Analysis of MSTR Stock Price

mstr stock Source: TradingView

A look at the weekly chart reveals that the MSTR stock price has plummeted in recent months, as investors appear hesitant.

The stock displayed a double-top pattern at $457 with a neckline at $234. Additionally, it has dipped below both the 50-week and 100-week Weighted Moving Averages, which are moving towards forming a bearish crossover.

Currently, the stock has breached the 61.8% Fibonacci Retracement level, while momentum oscillators continue to trend downwards. As a result, the most likely forecast for MicroStrategy stock is bearish, with potential further decline targeting the $100 mark.