Strategy has gotten torched over the last six months – since July 2025, its stock price has dropped 59.1% to $174.27 per share. This may have investors wondering how to approach the situation.
Is now the time to buy Strategy, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Despite the more favorable entry price, we’re swiping left on Strategy for now. Here are three reasons why MSTR doesn’t excite us and a stock we’d rather own.
Note that our analysis is rooted in fundamentals, not Bitcoin-driven technicals.
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Strategy’s billings came in at $114.3 million in Q3, and over the last four quarters, its year-on-year growth averaged 4.7%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers.
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Strategy’s demanding reinvestments have drained its resources over the last year, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 22.8%, meaning it lit $22.81 of cash on fire for every $100 in revenue. This is a stark contrast from its operating margin, and its investments (i.e., stocking inventory, building new facilities) are the primary culprit.
As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.
Strategy burned through $108.3 million of cash over the last year, and its $8.22 billion of debt exceeds the $54.29 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.
Unless the Strategy’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.