MicroStrategy (MSTR) shares are continuing their downward trend despite Bitcoin reaching a record price. This article examines the reasons behind the stock decline and the current market situation.
Current Situation with MSTR Stock
Currently, MicroStrategy shares have fallen to $375.80, down 20% from the year-to-date high of $457 and 30% lower than their peak in 2024.
Reasons for MicroStrategy Stock Decline
One reason for the declining MSTR share price is valuation concerns. The company holds 628,946 Bitcoin valued at over $74.78 billion, with an average cost of $73,288 per coin, resulting in a 62% gain. However, with a market capitalization of $107 billion, it is viewed as overvalued given the $33 billion gap between its current valuation and Bitcoin holdings. The ongoing drop is likely due to investors seeking to close this valuation gap. Additionally, MSTR has been struggling with a rising wave of short-sellers, with nearly 10% of shares shorted. Concerns over dilution resulting from the issuance of more shares to buy Bitcoin further contribute to the stock's volatility.
Price Analysis and Forecast for MSTR Stock
Technical analysis indicates that MSTR stock is at risk of further downside if it drops below the key support level at $358, which has not been breached since May 28. The stock is also trading below the 50-day and 100-day moving averages, suggesting potential decline toward $300. However, Yahoo Finance data shows the average analyst estimate for the stock is $569, representing a 55% increase from the current level.
The decline in MicroStrategy shares continues amidst short-selling pressures and rising valuation concerns. The company's current strategies may be at risk if stock prices fail to rebound.
