Strategy, formerly known as MicroStrategy, has seen its stock lose more than half its value over the last year. During the same period, Bitcoin has traded roughly flat.
The company pioneered a Bitcoin treasury business model, shifting focus from declining software operations to cryptocurrency investments over the past five years. Its approach involves selling new stock and issuing debt to raise funds for buying more Bitcoin.
When Bitcoin rallied strongly in previous years, this model helped Strategy stock gain 196% over five years, outperforming Bitcoin's 169% increase. However, with Bitcoin's price movement stagnant recently, the financing moves have diluted shareholder stakes and added debt without corresponding stock gains.
Many shareholders have reduced their exposure to Strategy stock in the past year due to its outsized downside risk when Bitcoin underperforms. The company's market capitalization remains closely tied to the value of its Bitcoin holdings and expectations for its crypto treasury approach.
If Bitcoin continues trading sideways or posts only modest gains in 2026, Strategy stock could face another substantial round of sell-offs. The stock could crash below current levels if Bitcoin slides substantially, though it could dramatically outperform if the cryptocurrency enjoys a strong rally.
The Motley Fool Stock Advisor analyst team recently identified what they believe are the 10 best stocks for investors to buy now, and Strategy was not among them. The team noted that their Stock Advisor service has achieved a total average return of 955%, compared to 196% for the S&P 500.
Keith Noonan has reported having no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin.