MSTR Shares Implodes as BTC and Investor Sentiment Both Plummet

MSTR +0.88% STRC -0.52% STRD +3.86% STRF +3.74% STRK +5.80%

Quick Read

• MicroStrategy (MSTR) dropped 40% from October highs as Bitcoin fell from $104,050 to $90,903.

• MicroStrategy owes $700M in annual preferred stock dividends but CEO Michael Saylor vowed never to sell Bitcoin.

• Reddit traders turned bearish and questioned whether MSTR can sustain payouts without raising new capital.

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Shares of MicroStrategy (NASDAQ: MSTR) are down 40% from October highs, mirroring Bitcoin's decline from its $104,050 peak on November 13 to $90,903 today. The collapse triggered a dramatic shift in retail sentiment, with Reddit's r/WallStreetBets turning decisively bearish. Technical indicators confirm the carnage: MSTR's 14-day RSI hit 23.57 on November 21, the most oversold reading in recent history, while trading volume spiked to nearly 30 million shares that day, triple typical levels.

The selloff intensified after Bitcoin crashed 13.5% in a single session on November 21, falling from $93,080 to $80,524. MicroStrategy, which holds 640,808 bitcoins as its primary treasury asset, amplified the decline due to its 3.37 beta. The company's extreme valuation metrics, including a price-to-sales ratio of 107.2x, left little room for error when Bitcoin faltered.

The "Ponzi" Narrative Takes Hold on Reddit

Retail traders are questioning MicroStrategy's business model. A viral post on r/WallStreetBets gained 176 upvotes by calculating what the author called a "Ponzi-Ratio Curve," arguing that MSTR's preferred stock dividends can only be paid by raising money from new investors.

Calculating the Strategy/MSTR Ponzi-Ratio Curve by u/JulianHabekost in wallstreetbets

The post detailed how MicroStrategy promises roughly $700 million in annual dividends while CEO Michael Saylor has vowed never to sell Bitcoin. The author warned: "The moment they just sit on this pile of bitcoin that doesn't generate any dividends while their fund raising stalls is the moment where people will realize that you need to also be able to sell an asset that you borrow against."

Sentiment has been consistently bearish across the past week, with scores ranging from 12 to 38 on a 100-point scale. Key concerns driving the negativity:

• MSTR's $700 million annual dividend obligation with no revenue source beyond new capital raises

• Bitcoin down 18% from peak, eliminating the momentum that justified MSTR's premium valuation

• Extreme valuation disconnect: 107x price-to-sales ratio versus 10-20x for typical software companies

Capitulation Signals and What Comes Next

Another post titled "I took one for the team, this is your bottom indicator for BTC/MSTR" captured the capitulation mood, garnering 80 upvotes as traders called their own surrender. One commenter wrote: "I took one for the team, this is your bottom indicator for BTC/MSTR."

I took one for the team, this is your bottom indicator for BTC/MSTR by u/JulianHabekost in wallstreetbets

Despite Bitcoin stabilizing around $91,000, news sentiment on MSTR remains neutral even as crypto miners rally, suggesting skepticism about the company's ability to sustain its financing model. Investors should monitor Bitcoin's ability to reclaim $100,000 and whether MSTR can continue accessing capital markets for preferred stock offerings.

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