MSTR Common Equity Will Eventually Become Worthless, Analysis Reveals

A new analysis of Strategy (MSTR) by Investing.com has revealed that even if the company's assets and liabilities remain unchanged, common equity will eventually become worthless under certain scenarios.

The stress test, which is a threshold model rather than a probability-based forecast, assumes that funding access stops and the current annualized capital-structure cash cost of $1.759 billion must be met first from the reserve and then from bitcoin sales.

According to the analysis, if everything stopped today, there would not be enough resources to cover all claims, with a wind-up test revealing that common equity is wiped out at a threshold of $20,860 today.

However, this threshold rises to meet a flat price over time, as the reserve drains and coins are sold to pay dividends that never stop. In fact, if bitcoin holds steady at $40,000 for five years with no issuance, the threshold increases to $30,105, while holding it at $30,000 for five years would see the threshold reach $31,586.

This means that time alone closes the gap between the current price and the point where common equity becomes worthless. The convertible debt moves most sharply in proportional terms due to its protection by the cash reserve.